I don't think that the floor and wallpaper colors harmonize well. But honestlly, removing the wallpaper seems your best route to modernization. Otherwise, you have to play it up with some crazy 60's feel, like an adjacent orange wall and some avacado chairs...

Thanks @acm Yes it’s a tough combo! I was thinking a retro vibe. Perhaps I’ll give it a try and if I hate it I’ll just paint the whole room a nic color.

I agree with @acm that the floor does not go with the wallpaper. I can't think of a paint color that would play well with both of them.