I found some fireplaces with built ins for you to check out. https://www.houzz.com/photos/fireplace-built-ins-phbr0lbl-bl~l_39926

Your mantle is so pretty, I'd be really careful about built ins that might overwhelm it, though you will definitely need something nearby to house your television components.

I totally agree with putting the television over the fireplace. It's such a space saver and lets you have just one focal point for the room.

Hi smith552, there's certainly nothing wrong with traditional design, it's great that you want to keep the character of your home. I could imagine a wall of wood panels and shelving flanking the fireplace.

TV above the fireplace might be too high if your space is tight, why not test it out now and see if it will work for you.

Start getting rid of that TV unit and mount the TV on the fireplace. Throw a bright color area rug and make sure you create a nice seating area. Add a coffee table to complete the look. On the sides of the fireplace you could add some shelving units or floating shelves and add some accessories to it. Also, make sure to add some colorful pillows on the couch to complete the look.

Your mantle is quite nice, so I would consider putting something on either side of the fireplace with cabinet below and shelves above. It should be neutral and blend into the walls. Definitely place the TV over the mantle. I am attaching two images. One shows an elaborate mantle with small narrow matching bookshelves. Narrow booksheves if they were simple and the color of the walls would not stand out and allow the fireplace to shine. Simple white with raised panel faces and a small crown moulding would blend in. They could also hold your additional equipment and you could place all your photos there. I am also attaching photos of white shelves and cabinet.

your fireplace is lovely! please reconsider the tv idea. it would ruin the beauty of the fireplace..i agree with dytecture (why is it that i always agree? :)) and for some odd reason, i recognize that kitty kat :)

I'm going to disagree with some here and advise against putting the tv over the fireplace in this situation. The room is verry small and the sofa is too close. You would be looking up most of the time which is not a comfortable way to watch tv.
Built-in bookcases on either side of the fireplace is best, with the tv incorporated to minimize the "big black box" effect, and to house all your media and pictures. Also, I would recommend geting a smaller sofa and chair, and painting the fireplace surround (and bookcases) white to make the room appear larger. This will also give it a less "dated" look. And group the larger pictures together in matching frames on a separate wall making one gallery wall instead of scattering them randomly.

I echo Mary Ryan. Tailor your potential built-ins to house your TV on either side of your fireplace. Unless you have a movie theater sized room, you will be looking up at your TV. I am an optometrist and hear from many patients about eye discomfort while watching TV. Sure enough, upon questioning, they have their TVs mounted above the fireplace. When you look up, it causes an unnatural neck posture, as well as dry eyes because of the distance between your upper and lower eyelids while looking up.

Having recently designed built-ins around a wood-burning fireplace, I was advised by the fireplace contractor that some fireplaces emit too high a temperature for a TV to be mounted above. He told me that the TV could suffer damage from the high temps.

If you decide to put your TV in your built-ins, ensure that you will be able to view it from every seat in the room. In other words, be sure that the depth of the fireplace doesn't obscure part of the TV. This can be done, in part, with a pull-out swivel shelf for your TV.

Your Tv dominates the space already, do not put it above the mantel, in my opinion that would be an abomination.
Get a lower smaller unit with doors to hide the tv while it's not being watched. Get a huge mirror for above the mantel the same width as the mantel always looks really good, makes the room brighter too. Change your picture display, it's too small and haphazard. Cluster them together, no need to change frames ,just the lay out. Pinterest always has good ideas for picture grouping.
More candles, vases and lighter more colourful ornaments on your mantel which would be reflected in the new larger mirror.
Can't really tell but the room looks as though it would look better painted a soft but warm yellow.

This actually is an easy fix. Build bookcases on either side of the fireplace. Get rid of that little chair by the t.v. Put your t.v. in the bookcase. I would arrange your pictures differently - in a group. That's it. It will look good. It's just that it's too cluttered and needs some organization.
Here's an idea:

Thanks for the ideas, everyone! This is the first time I posted a question and am so excited with all the suggestions.

Working with what you have: keep TV where it is. The mirror over mantle is nice, I cannot see what is over the mirror (it might be over powering the mirror?). You have interesting figurines on mantel, place them in center of mantel with a few photos clustered on each end of mantel. The photos on each side of the mantel and other areas of the room are nice, but should be arranged to show them off better (see below). Move recliner next to sofa slightly to left so it is a little on diagonal (mirroring the other recliner). Here is a tutorial for helping to arrange photos. They begin with paper templates (I use these all the time). The lowest example shows a fireplace. 4 photos arranged as the outer ones might look nice on each side of the mirror. Also try re-arranging your other photos. http://www.bhg.com/decorating/home-accessories/wall-art/plan-the-perfect-art-arrangement/