Just want to chime in and say I love the windows.

What a wonderful space you are creating. LOVE the wall color and overall cheeriness of the room. As far as accent colors, I'm really wondering if you need any, with the color explosion toys generally add to a room.

I LOVE your rug, but really wonder if it is practical for a playroom. The bumpiness of it will make it impossible to play with building toys or cars on the floor.

What do you think of this daybed from World Market? If you are handy at all, build two drawers on wheels to slide under it to hold stuff. If there isn't much clearance under the daybed, you could add casters to each leg.
http://www.worldmarket.com/product/index.jsp?productId=12171546

I've attached a link to a DIY play kitchen in case you haven't seen it. My kids were well past this stage when I discovered this idea -otherwise I would have done it in a heartbeat. You could also do something similar with a smaller piece.

If you have an IKEA near you, they have a wonderful, inexpensive children's table and chairs. You may want to consider mounting a roll of paper on one side of the table so it is always easily accessible. If you don't have IKEA, try Craigslist, and paint it a fun color. I've included a link just to show you how good their prices are. But the store has more fun colored and shaped sets that the online site does not show. http://www.ikea.com/us/en/catalog/products/50178411/

One last idea: If you sew, or know someone who does, there are some darling patterns for tents for children these days. Would be a wonderful addition to the room.
http://mccallpattern.mccall.com/m5827-products-9420.php?page_id=909

Here is a link that might be useful: Play Kitchen DIY from room divider

What a great room. You could really just throw the toys in there and call it a day!

Do you have an idea as to where you will put the daybed? If it can go on the short wall that will give you more room to layout the rest.

How old are your kids and what kind of play do you expect them to do? For example, a lot of times hardward floors or low nap rugs are best for play. Not to mention the lost cheerios, lego pieces and hairclips that can get stuck in other rugs.

Moreover, if you expect them to do artwork, that might also drive decisions about flooring, layout.

I see doors to your LR, IM assuming french doors --- will they be curtained? ie can you hide the visual cacophony?

My kids loved the interlocking letter and number tiles. A lot of kids like beanbag chairs to read in.

We use BedRizers to get our standard bed frames raised from 7" or 8" to 12" off the floor. They're sturdy and perfect, if a little spendy ($70 for a set of 6), but they make a huge difference in storage capacity. (No, I'm not connected to them...)

Here is a link that might be useful: BedRizers

Thanks everyone!

We have a daybed - its a basic highriser. I think I just want a bedspread and some pillows.

I was afraid I was going to have to ditch the rug :-( I love it but totally agree that it may not be practical.

For shades, I was thinking of doing simple cellular shades in white. I want them on the door too so we can pull them down for guests. Thoughts? I don't like curtains of any type.

I do think we can get the daybed on the short wall. There is plenty of room.

Love the idea of a bean bag chair! What color would you pick?

I'll try to get a photo of my living room and post it later.

Thanks everyone!

OK, I need to add this. I have mainly red, purple, brown and beige buttons. Any ideas of a pattern?

Here is a link that might be useful: Button Picture

Autumn trees?

Great idea!

Birds?

Love your room. I didn't see the ages of your kids either, but here is another idea if you could fit it in in a corner. My son made a 'stage', which was basically a painted plywood platform about 6" tall. It turned into a fort, a castle, and several other things between the boys and girls. He made some side panels and my DIL made a curtain out of some inexpensive fabric. The kids loved it. They velcro'd some different things on the front that made it either a stage or a fort depending on which kids (boys or girls) were using it. It got a lot of use before they outgrew it and dismantled it and that playroom turned into the oldest son's BR. The beanbags would be great to toss around for reading. PB Kids or Teen has good ones that last and are large in a variety of cover choices, or you can get smaller ones at Target or some other places but may be limited on colors. I think a bright red or chocolate color would look good with your turquoise for the bean bags.

My kids are 4, 2 and 1.

outsideplaying, that sounds like so much fun! But where would I put the play kitchen?

I would love to build one of those, but I have zero DIY skills.

Yes, I see your point. You don't have a lot of wall space. But if you decide against the daybed, that wall would be perfect. I wish I had a photo of the one my son built for his kids. It really wasn't all that big but it sure got a lot of use and encouraged a lot of creative play when the cousins were together.