One way to give a quick update to cabinets that can by inexpensive it to change out the hardware. Here are some ideas for some do it yourself knobs and pulls - http://rustic-crafts.com/?p=14373

Try removing the wooden valence and getting the new hardware on, and then step back and see if you are already happy with those two little changes. I bet you will be!

I realize that small kitchens also have little storage, but I think it would feel larger if the counter did not have so much on it.....all lined up. Can you stack the canisters inside a cupboard and set the knives in there, too? Mount a paper towel holder by the sink, maybe on that short wall.

Paint cabinets white.
Add bold colour in vase, cook wear,towels, floor mat, new storage containers, bright curtains etc

Get a Smeg fridge!!:)

If you want to transform the look of your kitchen without to much expense try the rustoleum cabinet transformation kits. They are amazing and anyone can do it!
I would also remove the decorative valance above the sink. And you could always remove the wall cabinets above the sink and do open shelves instead. This is a fun way to open the room up, showcase some of your favorite collections of dishes and update without much cost. Good Luck!

Getting rid of the the scallops and changing hardware as abbey jean suggested. Also remove items on top of cabinets and put baskets on top of fridge to hide those storage items. What does your counter look like? That will be a nice update.

I intend on getting ready of the ugly old balance. As of right now all my cabinet space is used up. I have turned a coat closet into a pantry to help open up storage. I can't tell you the exact color of the countertop, it's a tan and black color. Right now all my walls are a greenish color, I'm going to paint a light beige color because I wanna throw some turquoise or red in. I saw on hgtv.com somebody painted the bottom cabinets a darker color and the uppers were a white color. Would that help with size at all? Any ideas for a backsplash? And do I do did it on both sides?

I'm not sure what style you are going for but I would remove the scalloped valance, paint the cabinets white, get some milk crate baskets for the top of the frig. I would see if a carpenter or family member could build an open corner shelf on the outer edge of the cabinet on the window wall. An inexpensive backsplash option would be beadboard. It would give you options to introduce pops of color in the kitchen. Especially that beautiful turquoise you mentioned.

I love the idea of getting taller upper cabinets and painting everything to match. You could also add shelving to your laundry/water heater room to give you some more storage. I would also add a curtain to that door to hide your laundry if you don't have clearance for a door. Getting the clutter up will help tremendously. This reminds me of my first apartment and it was a nightmare to keep everything contained.

Saw a great kitchen in Fine Homebuilding's Kitchens&Baths special issue, Winter 2013. White cabinets, stove flanked with butcher block counter both sides and with turquoise subway tile for backsplash.

I am painting the cabinets next week. Thanks for all the input. I do have another question. Do I have to sand the cabinets, or can I use a no sand primer on them?

If you use Annie Sloan chalk paint you just have to wash them good first ,no prime or sand ,it will not chip off,google it