So you have two issues: the shut-off valves need to be accessible in case you have to shut of water to the bathroom to do repairs, have a leak, etc. That's what's in the access panel in the corner of the room that we're trying to find another place for... The shower valves are behind the handles ("trim"), behind the tile, inside the shower wall. Since you're considering doing away with the access you currently have and creating a finished, tiled wall on that wall, you want to be sure that all the plumbing in there is in top notch shape and won't need replacing soon. In a situation where there's just drywall on the other side of the tiled wall, it's not a big deal to cut out the drywall, replace the valves, replace the drywall, finish and repaint. Doing the same thing on a tiled wall is a lot harder and more expensive. You just need to think about how you'd handle that scenario in the future (for your new shower plumbing) and if I were you, and you have the budget, I'd go ahead and replace the valves in the old shower, from the back of the wall while you're reno-ing the new bathroom. (Although I have only done this from the front/tiled side, I am pretty sure it can be done from the back side without damaging the tile) Then you won't need to remove the old bath's tile at all. Your old bathroom probably has the sort of showerhead/handle/faucet/valve that comes all together as a kit... but in your new shower you're likely to be buying seperate valves & trim. It's kinda confusing, depending on what you're adding (just a showerhead and one control? Or, also a handshower or body jets?) Keep in mind when you start shopping for these parts that if you do it a la carte from Kohler, Grohe, etc, you need to get a valve and trim (that's the guts and the shiny handle) for each component. I was dismayed at first because I found the picture of the handle I wanted on an online plumbing store and thought to myself, well, that's not too expensive!... it was like $100... and then realized that was the TRIM ONLY and I still needed the valve which was another $200!

You're lucky to have such a large space! However, I wouldn't want to walk past the toilet to get to my closet. I'd move the entry to (large) Closet #1 via the linen. Create Closet #2 in the shower area. Move the shower opposite the toilet on the end of the bottom wall. Alternatively, leave the shower where it is but make the entry to your closet where the linen is. Move the linen opposite the toilet.

A small bathroom is a small bathroom, and unless you remodel your home so you can add to the bathroom's space, that's going to be the news. But from that, it does not follow that you're simply stuck with an inadequate bathroom. Replacing worn-out sinks and vanities will surely help, but if all you're doing is more of the same, that's what you'll be left with--more of the same. I would very much recommend buying the very best your budget will allow and searching the Internet for innovative ideas. You will be in the bathroom every day of your life. Why not make that place a true retreat? With a little imagination, you can. Here is a link that might be useful: Cabinet & Furniture Trends & Information

Switch the tub and shower locations. Add windows around tub.