Hi! Looks like there is a lot of red! I think that a nice, classic look would be great! I would first begin purchasing an item that you like the colors in, such as a towel or something small to draw inspiration from. Here are a few ideas for you:

http://deciture.com/shop/bath/world-market/cool-ombre-sculpted-bliss-bouquet-bath-towel/
(nice and light)}

http://deciture.com/shop/bath/world-market/lattice-sculpted-bath-towel/ (sweet and intricate)

http://deciture.com/shop/bath/world-market/mosaic-printed-velour-bath-towel/ (my personal favorite)

Hope this helps you!

I think you could easily update with basic cosmetic changes. Light fixture swap. Painting the cabinets far easier than changing sinks and faucets. Maybe a black lacquer? Change swag to a Simple bamboo shade.

Wallpaper and mirror over the tub removal. Light colored walls.. Maybe white or gray paint?
Have fun with it!! :)

Will you be replacing the fixtures or keeping them?

If keeping them, I would start by clearing out absolutely everything portable, removing wallpaper and window treatments. Prime walls in white, it will give you a clean canvas to start over.

You might consider adding built-in medicine cabinets on each side wall near the sinks. Or change out the large mirror (and Hollywood lights) for individual large medicine cabinets. That will increase your storage space.

Find a new inspiration piece and use it to pick new paint colors, new towels and new artwork. You can move the older artwork somewhere else in the house or put it away for a few months.

YOu might also flip through some Houzz photos of wallpapered bathrooms. Some are spectacular.

Are you loving the red? If not, I would really take my time and see if I could change out the red tub and sinks for something less "dramatic". If you do like it, then it is worth working with it. Just worth clarifying before you spend little now or save to spend bigger later.

I agree if you like the red work with it ( it an be done )but to up date it remove boarder and wall paper to start.

Apple pie. Yes I will be re glazing the tub to white or cream. I will be replacing sinks, lights, and mirror and laminate counters. We are thinking of painting base cabinets. We also need more storage. I'm not sure I want to remove the mirror by tub because makes the room look larger and bring in more light to this northern exposure room. I will take your suggestion by starting with a clean slate and seeing the space with new eyes! Thanks for your suggestion.

I painted our 1970's chocolate brown cultured marble tub so it wouldn't clash with 1980's wallpaper. It has held up but I don't know if it would in jetted tub.
If you keep the red you can use red toile prints on the window and creamy travertine looking tile.
definitely get a couple of those wall cabinets with towel bars for the sides of the sinks. If you are very careful you might could have the mirror cut into two smaller ones so you could put in a storage tower between the sinks, maybe even recess it into the wall some to save counter space.