Honestly?... I would want to change the layout. So I guess my answer is, I'd wait till I could do that.

The top tier on the island would drive me NUTS.
I'd choose temporary function/form and chop that tier off. Possibly make the island deeper. Laminate would be a more than fine and inexpensive way to finish the new top to the island. Or butcher block. That might be nice too and add some texture to the space.

Others here who actually design can tell you how deep you should make the island so that there is sufficient space between the sink and the others gathered round.

I'd wait till I lived there for a good while to see how you actually use the space to make any other changes or invest more money.

If changing the island from a 2-tier to a 1-tier top won't solve the issues you have with prepping all over the place, then I would wait to do a larger remodel. That's what we did for similar reasons.

Post a lay-out (overhead view) of your kitchen with dimensions included (see the New to Kitchens thread for more info) and let us help you see what possibilities your space offers. If your cabinets are individual units, then it's possible that you can re-use the cabinets in a different configuration (we'd need to know their widths, too).

How long have you lived in your home? If only a short time, then living with it for awhile longer, as suggested by BalTra, will help you understand more about how you want the space to work.

Here is a link that might be useful: New To Kitchens? Posting Pics? Read Me!

Honestly, the overall layout doesn't look too bad. There seems to be good space around the range. The aisles look pretty good. The cabinets look nice and look to be in good condition. However, the two tier island is obviously not functioning for you. Additionally, the fridge placement looks a little odd to me.

Perhaps you could consider making some minor layout changes using the existing cabinetry. You could rearrange the fridge wall to move the fridge to the outer end of the kitchen giving additional counter prep space across from the sink. You should be able to cut down that knee wall behind the island and make a single tier island with more leg room with a deeper counter. You might even be able to move the sink to one end or the other on the island if you want a single wider section of counter space.

Personally, I would try to keep the cabinetry and consider doing minor layout changes but keep the overall footprint to save the flooring as well. You could get some bids to give you an overall idea of cost in order to determine whether you can afford it now or want to just wait.

I had a two level peninsula. I agreed to it, but started to resent it for much the same reasons as you posted. The salt on the wound was that it was too tall for me to sit at.

So, I say go ahead - off with its head. I would get a laminate top in the original pattern. I might extend it a little bit more - to a 15" overhang - very maybe using some color underneath? See if I could find something to sit underneath to hold dishes? The other thing that could work is an enclosure where the top and two sides are done in the counter material. It might provide some dressiness or add a designer element while still supporting the counter extension. How it looks and how you think it should look are really personal decisions and you should choose what makes you happy.

I don't think I'd do granite until I was sure I liked the layout and cabinets - about 6 months to a year for that and to find out what else got on my nerves. Generally speaking, that's how long it takes me months to figure out my own layouts.

Nix the bar seating and do the cheapest countertop you can find. Ikea butcherblock will probably be cheaper than a custom sized laminate counter. Then live with the kitchen for another year or two to decide what other tweaks to the layout may be needed before spending any more money.

I'm finding myself agreeing with GreenDesigns and bmorepanic, cutting down the high bar and replacing with cheaper countertop. To be extra-cheap, would it be possible or advisable to take the high counter piece and try to seam it against the larger piece? For butcher block would you do the entire counter in that material? I live in Calgary where woods come to die ;-) it is very very very dry here. Thanks!
Caroline

I need some help with the laminate countertop now if anyone has done laminate on laminate before.
I can get a matching sheet of laminate for $100 but my counters have a bevel edge. I was thinking I would remove the top tier, cut down the wall and reroute the electrical, then can I butt the top tier against the lower tier and then just put a whole new sheet of laminate on top?
Alternative would be to get a whole new countertop for about $650.
Thanks!

NO you cannot do laminate on top of damaged (cut) laminate nor can you DIY a bevel edge. You can DIY a whole new counter with a flat edge, but you will have to start with a whole sheet of particle board and do the edge thickness buildup as well as the buildup for the cabinets. If you have a laminate trimmer, some experience with contact cement, and some pretty big pipe clamps, it's very DIYable. Or there's awlays Ikea butcherblock. It just needs the sink hole cut and to be cut to length.

While the layout may not be perfection, you have a perfectly workable space, esp once you make it a one level island. Your kitchen is young and the materials have a lot of life left in them. I'd get a pretty counter for the island of some sort and possibly add shallow cabs to the back side if you don't need seating. I would do it well because once you start ripping apart your current layout, you are into big money and the money spent on the kitchen already would be wasted. If the cabs were in poor condition or ugly, then you'd have more reason for a big re-do.
Keep it simple and relatively cheap. Your current kitchen is much more of an "after" than a "before". Cooking in it with a one level island will not be a hardship by any means. Do too much and it all snowballs.

Wow - I could get it in just about any laminate for about $300. Things really are different in different places.

You can piece wood counters with a special bolt underneath - one type is shown in the link below. Amazingly - they're also sold in packs on Amazon. You might need a router.

I think Ikea's largest island piece is about 39 x 73" and it runs about $200. 8 foot by 25" is about $169.

Here is a link that might be useful: These connectors

Happy New Year! Welcome to Canada prices!! Thanks for all the suggestions. I'm not too keen on Ikea butcherblock but it is the cheapest option. I'm going to take a look at it in the next few weeks. (I think it costs $269 here for the larger piece).
Has anyone heard or used the HD? laminates from Wilson art? I had a fellow come by and measure to quote on these newer materials, that look more like granite, and he can do a bevel edge.
Thanks everyone for the very helpful thoughts and advice so far!
Caroline