We would need a bit more info and some much better pictures Right now I would say you need much better lighting to start.

I can tell you we painted dark paneling in a previous home and the change was truly amazing. I can't remember the details, but our painter had to do some special prepping due to the type of wood paneling we had. In our case, we used a soft white on the walls. It completely transformed the room.

Is it solid wood or thin plywood? I hate seeing solid wood painted but have at it if it's 4x8 paneling.

Better photos. This is our lake cabin, wondering whether we should paint the paneling. I think the house was built in the 50s the paneling is solid wood.

oh wow, what an overwhelming amount of wood. I would definitely add more lighting. I would also absolutely paint it. It would look so much fresher painted. Just make sure the proper preparation is done. It will look stunning in a cream or white. Here are some photos for inspiration.

YES, YES, & YES - paint it.

Do you have any idea what was used to finish the paneling? That will determine what products you have to use and the amount of effort to make it look nice.

I’m not sure what the finish is. It has some shine on the paneling.

Really depends on what you like, how you want the space to feel and your budget and energy for the space. Painting is one option; another is whitewashing the panels. Btw, if this is the sort of thing you care about, I'm spotting more and more wood-panelled rooms in decorating magazines these days.

Solid wood walls can provide a warm coziness to a room and I'd be inclined to keep them (or some?) in a lake cabin as long as they didn't compete with the flooring or suck out the light from the rooms. The furniture pieces would need to be light for airiness and contrast. (I'm quite fond of warm wood paired with white.) Agree with Patricia that your space could probably use more lighting.

Here are some panelled rooms for inspiration. Just to give you colour palette ideas.

And here's an Elle Decor slideshow on rustic living rooms with many of them featuring wood panelling.

A Style at Home feature on a wood-panelled cabin.

Muskoka cottage

Scroll down to the office with cypress walls in this House Beautiful feature on a Bahamian house Matthew Carter did for another take on wood-panelled walls. These walls are much lighter than yours but still, it's a modern nod to vintage rec rooms.

Good luck with your decision!

I repainted my family room’s panelling three different colors over the years and was so happy with its transformation. There is a lot of info on line in regards to prepping and painting and also look at lots of pictures to help decide on color. Given your cupboards are cream (if you want both kitchen and living room to be the same), I wouldn’t recommend cream or white. There are so many colors that would create warmth, lightness and interest and be sure to incorporate its color in accessories.

Since it is a lake house, I might like to see the wood stay too, since it is a nice quality paneling. If it were a regular residence, then, I would definitely paint at least part of it. My house had paneling in 3 rooms, but, it was not the nice thick stuff. It was the stuff used in the late 60's. I tore it all off, and put up sheetrock, 7 yrs ago. The house is so much brighter and a lot more comfortable to live in.

Well, my preference would be to paint it or replace with drywall. I think the space definitely needs more light in general, maybe work on lighting and change the bulbs before making a final decision.

What is your overall goal? Do you WANT to lighten the walls? Do you want to have a bright space or a calm, cozy space?

I don’t mind your wood panels, it’s cute in a lake cabin, but get why you’d want to paint them. Most of your furnishing is dark so that doesn’t help either.

I asked about the wall finish because if ypu have an oil based finish (which you may given the age), it will require more prep for a good finish. You have actual wood, not cheap paneling sheets so the process may be different

https://www.aconcordcarpenter.com/painting-over-polyurethane.html