Love this one too!

I'd go for a lighter wall color for sure. Light blue wouldn't match your countertop, which looks to be sand. You can go with a warmer blue, closer to teal but not too dark.

I think blue cabinets would be fun and charming, but if you aren't staying in the house for the long haul, white is safer for resale (and pretty too). White cabinets with light blue walls would be nice. But I'm assuming you are changing the countertops, yes? Otherwise I agree with Don Camacho that the baby blue and white combination may not work that well with your current counters, though it is hard to tell from such a small picture.

It depends on how long you're staying in this house. One thing is for certain that no one seems to bring up is when it comes to cabinets, it's a heck of a lot less expensive to re-face cabinets and door fronts with a totally new design and look rather than purchase all new cabinets.

I couldn't recommend white with those counters and floors - you could do an off white in the yellow undertone direction but that won't give you the change you seek. If you will be in your home 5 years at least, paint them the blue green tone that will resonate with those honeyed counters (blue with enough green to harmonize with the yellow). You won't regret it, it will add so much charm and who knows what the next buyers will pay extra for the overall effect of charm.

Do test more muted tones - casework requires a little different approach. test http://www.benjaminmoore.com/en-us/paint-color/walesgray
a pale off white neutral on cabinets with a blue green tone - a complimentary clear tone for accent - painted chairs or island -
http://www.benjaminmoore.com/en-us/paint-color/williamsburgwytheblue

We will be painting the walls Benjamin Moore Palladian blue as well... Forgot that part.. :)

Try a deeper tone for your cabinets then - contrast. Something like bm atmospheric http://www.benjaminmoore.com/en-us/paint-color/atmospheric

That will work with your countertops and floors - use a spring green accent tone and linens - like bm spring meadow - or paint your cabinets spring meadow - green cabinets bring lots of light, are very neutral and charming . .

You could paint your island one of the deeper greenish blues like BM atmospheric and the rest of the questions a creamy white. That would be easier to change for a future home sale.

Stick with neutral colors on the pricey hard to replace items like cabinets and add color in the tile backsplash, paint and accessories. When you go to sell, potential buyers will think: I love it as is or I hate, but if they can easily change the color scheme without redoing the cabinets they will be more inclined to buy. If they hate it but can't easily change it they will offer less for your home, knowing they have to replace the cabinets. No one wants to repaint cabinets, the paint builds up, you lose detail like the crisp edges of molding, the paint chips and you can see the old paint color through it, etc. Cabinets are one of the biggest ticket items in the kitchen so play it safe - even if you don't sell your home, you could get bored with the color a few years from now.

The light blue in that picture goes so well with the marble backsplash so i'm inclined to vote for light blue!