Thanks for all the pictures and advice. My DH thinks that painting the floor is a good way to go, but I think it needs to be nicer. Sounds like most of you agree that the floor needs to be nice enough to feel comfortable with kids sitting on it to play. I think since we might be not putting much furniture down there to show, that clean painted walls, new light fixtures and carpet would be the easiest to do and have the largest appeal. Our ceiling is finished plaster, and has radiator pipes hanging on it, so it is not a new house with high ceilings and that type of setup. The ceiling and pipes are all sprayed off-white. Thanks for the preliminary help. I am currently working on emptying it out (we're getting a dumpster in 2 weeks). I will post some pictures when I get it emptied out.

eliza, my photos might be deceiving but the room is painted a pale green (BM Soft Fern) and isn't going to be re-painted any time soon! It's a big room (about 20' x 20') open to another big room (where our pool table is), and both were painted just about two years ago. Thanks for all the nice comments! I remembered 1 or 2 people were asking about playroom ideas recently so I figured I'd show mine.

Thanks so much everyone! I really appreciate all your suggestions. I guess my downfall is that I'm a 'researcher' - I have to see ALL my options out there before I make a decision. Definitely no impulse buys for me - ha! But then of course, it drives dh bonkers because it takes me FOREVER to make up my mind! :) I was actually thinking of a warm cream or light yellow. Dh really wants to paint the floor sage green (which I don't really love, but I rarely let him have his way - haha). So do you think a pale yellow would look ok with a sage green floor? Does anyone have examples or pics of a nice soft yellow (I don't want anything TOO yellow). teacats, I love your art idea! I do really like some of those animal prints or we might even try to paint some ourselves. I was definitely thinking of having dh build a bookcase w/ colorful bins for storage, then I also want to have an arts/crafts area (with a dry erase wall to write on) then also a kitchen/baby doll area, reading nook w/chairs, sports area w/balls & bikes, and then a dress up area too. My problem is I have so many ideas - I just have trouble executing them all! Does anyone know of any cute kids rugs (bright stripes or some type of motif) for under $200? Thanks again for all your help!

Maybe this article will help. The colors she's suggesting might work well with Sea Salt. I think Creamy would brighten the room and be a nice backdrop for other colors. I also think white or off-white walls with a black accent wall would be awesome for bright colorful kids' art. Excited for you and the family! https://www.kylieminteriors.ca/the-best-light-paint-colours-for-a-dark-room-basement/