I think floor to ceiling would look better. Having the tile stop at the vanity and then having just painted wall from the vanity top to the floor seems awkward.

I kind of like the idea of floor to ceiling with that tile, IMO.

Yes, I agree with the floor to ceiling, it will look more finished and feel more elegant;)

There does not appear to be any natural light in this powder room (not uncommon). The tile has a matte finish which means it is prone to absorbing light, not reflecting it. I would take the tile just above the height of the faucet and just under the mirror then down to the floor.

Floor to ceiling ...