I wouldn't continue the floor tile around the tub or in the shower, it's too busy. Bring home some samples of off white subway tile to see what looks good with the floor and use that. When I say subway, I mean any size rectangular tile. There are lots of variations of subway out there. The one thing I wouldn't use is the 12" X 24" size because the octagonal window over the tub indicates your house is traditional, or maybe transitional. I think you could have gotten away with using that on the floor, but I don't think it is the best choice for a traditional home. What color is your vanity? Can you post a picture of that side of the room?

I'd use a glass mosaic tile to add some texture & shine.

We plan on replacing the counters and having the cabinets professionally painted as well.

Thanks for the suggestions. We will have the walls around the tub reduced to 1/2 walls and take out the bulkhead. We are putting in a smaller tub to increase the shower size. The photos (#1,5 & 6) you posted are what we have in mind.

I agree with Beth H., the cabinets aren't worth saving. One of the things that adds cost to a bathroom remodel is moving plumbing. It doesn't sound like you are going to have to do that, so consider yourself lucky and splurge on a new vanity.

To answer your question, go with 12x24 this time.

Whatever you do, make sure the 1/2 walls are well-braced, so they can't move with lateral pressure on top. That may involve pulling up floor and securing to joists and/or using 2x6 walls.

Beth, you're right on the money. Ukpudge, as much as you can now or you'll regret not having gone all the way later.

I would also consider putting in a new window over the tub, depending on what’s outside. High rectangles if need to or just big window (see Beth’s photos).

have