One thing I would definitely do is use your trees at the back as a backdrop for other items. In other words, expand a bed in front of those trees so they don't look like a wall of green at the back of your yard. When sitting on the patio your eye will be drawn back there, so why not use it to your advantage and plant in front of the trees.

Saypoint, who shows up on these threads, has a beautiful example in her own gardens of using arborvitae, in her case, (I think) as sort of a "wall" behind a gorgeous mixed bed.

And by the way, a sand box is a wonderful and essential thing for a child! If you research gardens for children you will find some lovely and creative ways to incorportate children's "stuff" into a garden.

I'm curious privacy from the 2nd floor windows but not the see-through chainlink fence to the left in the photo?

Kids will need some running paths preferable in a circle and garden beds to play hide and seek in.

For a playset don't forget to add cushinoning material beneath it for fall protection.

I've taken some more pictures just now and added them to the others. The 2nd floor windows bother me most because when I stand at my kitchen sink area and look out the window, I am actually looking almost directly into those windows. They are pretty far away but it bugs me considerably. I don't want to look in someone else's windows and feel creepy that that is where my eye is drawn. I can't actually see in them though - it's more a nuissance that the only thing I see when I look out the window is someone else's window. This was probably my first concern because it's a year round problem. The biggest privacy concern is actually my closest neighbour's window that I face when I step out onto my patio (more of a 3 season problem). The last picture is what I see when I step out of my kitchen onto the patio. I have been thinking about building an open lattice-like screen to go between the bbq (in the foreground but not visible) and the fence. I would then have something grow up and cover the screen. My concerns with this are that I don't want to block all sunlight from my neighbour's window and I don't want to inundate them with a really strong fragrance. Also, I'm not sure what the guidelines are for planting things close to a bbq. My main goals with a screen there would be to serve as a backdrop to the bbq and to block off the window (and the a/c unit), not to serve as fuel for a fire. The bbq should stay in that area because that is where the natural gas hookup is located.

We've lived in this house for a few yrs now and this yard does nothing for me. I always feel on display whenever I'm outside and I am actually really uncomfortable being out in our backyard. The advice we received when we first moved in was to wait a growing season before doing anything. At the beginning of the second summer, we trucked in 5 yards of dirt and put in the shapeless bed along the wooden privacy fence and a bed that is too small around the patio. The patio has always been on our list of things to replace so I didn't want to put too much effort or planting material into a temporary bed. The soil around the patio is also better quality so it was easier to dig that bed. The chain link fence was put in after we moved in (our neighbours have a dog). It doesn't bother me as much as the other areas. I find it unobtrusive and the dog has never been a problem. It would be nice to have something of interest along that fence because when we sit at our kitchen table the chain link fence is more visible than the wooden fence.

I don't have a photo or a roadmap, but your yard looks like it could be great if done as 2 or 3 "garden rooms"
to divide the long narrow space. You would find some relevant photos in books on small gardens. That gets you away from the bowling alley look and also gives you spaces that are fun to be in.

In other words, I would try not to surround the perimeter with tall things and then you are just in the middle of it with them towering over you, even if they block the windows, but look at some of these garden room designs, in which there would be tallish small trees and shrubs but cozily enclosing smaller spaces for sitting, walking.

I'm searching too for a good design. So far I found this book, page 24 & 25, where there are 3 plans with "garden rooms" as Frankie mentioned. I thing it will work for you too.
Just google Gardens for living Design your outdoor room by David Stevens, and you will find a PDF file.