go through pics on here of paneled rooms w/stone FP. or search painted paneled walls. I would leave the ceiling and try the walls. (you must prime first or the knots will bleed. use a shellac or good oil base primer)

you could also paint out the dark beams to white but I'd leave the wood in between natural.

to me the ceilings are high enough and can carry the wood. the walls feel oppressing to me.

another option is to drywall right over the paneling.

A lot depends on the whole architectural style of the home. It appears rustic from what I see and if that is the style of the home throughout it would be best to keep the integrity of the whole design. What I would recommend is better lighting for sure. I would get a new light fixture plus add additional lights. Embrace the warmth of the wood and changing any furniture, accessories and art work to a lighter color will also bring in and add light to the room. Best Wishes!

sheetrock or wire lathe and plaster the bays between the rafters

i'd do the walls, all the walls. you could paint one section and see if you like it, if you dont wallboard it.

this is a style, but it isnt everyone's style, (it certainly isnt mine). i think once the walls have stopped being this particular way, the ceiling will look stellar as is.

This is pretty much the only "rustic" room. The rest of the house... the kitchen you can kind of see in the background has painted green sheetrock walls and light wood cabinets and a light tiled floor. It is my hope to have this room match a little better with the rest of the house...thus my interest in painting one of the walls if not more.

I'd paint it all, ceilings and walls PPG's Delicate White except the beams. Would stain the banister the same color as the beams to tie it all together.

It looks like you need a lot more light. Try adding more lamps and lighting around the room and perhaps it won't feel so dark. Here are some inspiration pictures for you:

no glass it's just open in between the stair rails

Before painting anything, would improve lighting. Update and add fixtures and lamps.

Light color sofa & area rug would also help.

to the previous commentator how would you tweak the furniture...the room is pretty much a square maybe 40'x40'

I think that was me! it seems like the fireplace/tv is the focal point and that you could fit a seating plan that either included 3 sofas or a combination of sofas/chairs and that they could be set back a little from the fireplace. Could the dining table be relocated?

Also wondering about the blue arm chair at the bottom of the stairs, is that where you go when you are being naughty? It seems a little lonely over there!

There are some true whiz bang room organizers on HOUZZ so maybe once you have decided about painting, you could post another thread about that.

But...I still think painting would transform this very cozy nice room to a fabulous space!