Thanks for all your tips and ideas. Here is what I have in mind for that space.
First of all, the couch will be staying. Everything else (and there's not much there) will most likely be going, besides the tv of course!
Here is my inspiration.
This is the layout I'm aiming for. Of course I don't have the windows on the side of the fireplace but you get the picture. I really LOVE the colors, of course my couch is a chocolate color, but I'm hoping to find some chairs in either an orange, or a light cream color (like the couch in the picture) to accent it. I have a friend searching for chairs of this variety:
I want two of them. I would like to find either a square coffee table in a chocolate colored wood, or a trunk that can double as a coffee table/storage space. I will also need a small side table for in between the chairs.
I am searching for some curtains but am waiting until I figure out what color chairs I will be getting. What I'd really like is plantation shutters, but we'll see if that's an option right now. The best part of this redo is that if I go with some deep oranges or a similar color, I won't have to repaint at all.
I haven't decided yet if I should paint the mantel, we'll see. If I do, I will be going with white built-ins of some variety. I would really like a small storage bench on part of the built ins with a nice comfy pillow/pad in a coordinating color.
I will add some fun pillows here and there in coordinating colors as well. I am going to repaint an old frame I have and get a picture of the kids put in it for above the couch. I love my Organic Bloom frame but sadly it's not quite large enough. I'm sure I won't have any trouble finding another place for it!
I know that most of this is in my head, but I hope it makes sense.