recessed lighting close to the walls creates a wall washing... LOVE it.

it's ambient light, great mood lighting... No one should ever want stark overhead lighting, unless you are doing surgery.

I think your electricians just haven't had much experience with good lighting ideas.

It is a tricky space for ceiling lighting. I can't see the measurements on your plan, so I can't tell for sure how much space you have in the perimeter area. In general, the perimeter is where I would place can lights, but maybe not quite as close as you have (3' from wall). I would also place them about 4' apart. If you put them only in the center of the room, you will end up with shadows in the corners. If it is really close, one idea is to use wall washer can lights. They can be adjusted so the light just washes the walls of the room, which gives a nice light for a room where you don't need a lot of light for tasks (like you would in the kitchen). Sometimes these are used to light art.

Here is a similar living room - but it looks like they have more space in the dropped-down area than you do. Either way, it's pretty close to the walls.

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Here is one where they placed the lights closer to the center. You can see the shadows on the back and side wall.

This is a dining room where they have smaller recessed lights near the the wall. It seems pretty similar to your situation.

Did the electrician say that there wasn't room to put the lights there or was he saying that it wasn't a good idea to put lights there? My opinion is that if there is room for can lights, put them along the perimeter. You may also want something in the center, though. If you can post a larger image of the living room area I will take a look.

Thanks so much for the wonderful info! Here are a few additional images. We are thinking maybe we should do a ceiling hugging chandelier where the center light is now with some additional recessed lighting around the perimeter of the room. Would that be too much? We don't use fans, but for aesthetic purposes should we perhaps consider one?

I wouldn't do a ceiling fan unless you want to use it. They are generally not something nice to look at and are visually distracting in a bad way. Unfortunately for me, my family loves having ceiling fans :(

Are your ceilings 8' at the center? Or higher? I think a pretty flush mount or semi-flush mount light would be nicer than the plain Jane you have there now. Make sure that the bottom doesn't go below 7' - don't want anyone to feel like they will hit their heads on it.

Not sure what your style is, but here are some examples. I personally do not like to see bare light bulbs, especially in an area where you don't want harsh light, like a living room or bedroom.