I agree with the no lamps unless necessary. I have two little ones and while they have never knocked over lamps, I don't have any within reach in the playroom. We rely on natural light and then a floor lamp placed behind the couch that isn't easily accessible. I would do as Tib suggested and put pretty bookends and books on top, or random toys or big ones that don't fit in the cubbies. Love the map idea over the storage. Then I would get attractive baskets for some or all of the cubbies. Then even if they aren't filled, everything looks uniform. I like uniform. : ) Serena & Lily has nice baskets (I have some in my daughter's room) and they are having a 20% off sale in a few days. Land of Nod is also running 15% off bins and baskets right now. Pottery Barn Kids has some cute ones and you can find a coupon every once in a while. Bins and baskets in general aren't cheap but I love the look and function of them. Just make sure and measure your shelves before ordering.

I'd go for House #1. Thinking, get out that bad rental, and who knows really when #2 will be ready. Developers make all kinds of promises that don't come through, and you sure are right about the pricing. (will leave out long, nearly identical story that happened to friends, pricing left them in a pickle) Also, I know you're thinking playroom now, but not knowing how old your kids are and how long you plan to stay in this house, I agree with pixie_lou and lyfia's assessments. In the long run, I'd take storage/work area over an extra room to clean up any day. Nobody spends time in the side yards - choose the best backyard and then front yard/neighbors. And that's house #1. You will be happy when you see your electric bill that you are not facing west! Another pro for house #1. Just my thoughts. Hope this helps!

Ok, wasn't gone that long. In the meantime, could you put your sofa on angle toward the tv? Just line it up with the rug. Take your leather chair and place it along the short side of the rug next to the window. If your small table will fit in the corner of the sofa and chair that would be a good place for it. Oh, and if what I think I'm seeing next to the tv(stacked suitcases) you could put those in that corner instead. The decorative key might look good above the cut out to the kitchen...hung long ways. Take down the art print on the wall next to the cutout and arrange a collection of your photos. Try not to go hang any higher than the the print currently is and have the bottom of your last frame hit below the height of the bottom of the cutout. I know this isn't what you were asking for, but while you're planning room layout and the more permanent direction you want to go in...there is no reason you can't try something different with what you have right now.

Our home has rough-sawn cedar siding. Cedar can certainly be painted, but it's a bit of work because of the texture and nature of the material. The most important step is to use a primer that will prevent the tannins in the wood from bleeding through. The best ones are oil based, but I believe there are some water based ones that will work without the odor of oil—a good paint store can guide you. After the primer is dry (you might need 2 coats) you can use any top coat you want.