Your kitchen is very nice. I wouldn't change a thing, but if you don't care for the current color cabinets, then have them painted or darkened if you prefer; the espresso color you have on your entertainment center is a nice color, not too dark. Find some pics of kitchens you love and see what color the cabinets are - then find a similar color that goes with your countertops and backsplash.

If the wear on the cabinets is enough that they need refinishing, it could be as expensive as a good paint job. My mother was able to have a few damaged doors refinished very reasonably, but we live in an area where labor cost for that sort of job are lower. It also would depend on if the doors are solid wood or veneer - wood laminated over a mdf core. Veneers are hard to refinish. You could take a door down to a reputable paint store and ask for recommendation on who to call for an estimate and if the door was solid wood or a veneer. As I mentioned, I am not a paint the cabinets person - but I have painted cabinets that were worn - my original kitchen cabinet uppers - which I then put in my laundry room. That was 20 years ago and I am fine with them. They don't get much abuse in the laundry room though. I refinished the old kitchen lowers a couple of years ago (they had been stored in the garage) and used them in my basement kitchenette. I know how to do that and felt stained wood would stand up better since the kids use that space. If I was in your position, and I could not afford new doors, and I did not know how to refinish, I would paint. I would keep a bit of extra paint around for touch ups and be aware that this will NOT increase the value of the home. When you go to sell, you will have done your economical best to make a pretty kitchen, but the cabinets will be worn cabinets that have been painted. If they still look reasonably good, a buyer will see that they have a presentable kitchen and time to save for the needed new cabinets. While I agree with the painting steps listed above, your cabinets are not worth the royal treatment. I used two coats of a good bonding primer - Zinsser 123 - and two coats of a latex acrylic enamel. Since the time I painted my cabinets, they have come out with some good cabinet paints, and I would use one of those after the primer coats. Because of the wear, I would give the cabinets a good sanding to try to even out those areas. I simply brush painted my cabinets - I did not spray them. Some of the newer paints do a good job of self leveling. I would get handles for the cabinets - the less you touch paint with wet or sticky hands the better. Even the normal oils on skin can have an effect on paint and other finishes over time. I sometimes have had fun with older kitchens - get creative because it is hard to make things worse. I do not mean you have a bad kitchen, it is just the cabinets have reached the end of their life and I don't see you devaluing them by painting them:) I do imagine this space as warm and pretty rather than the gray / white look.

If the original paint was of such poor quality as to need redoing under warranty after only a year, and the subsequent coating is chipping even worse, then more coatings on top with that as a base is not the answer. Any paint job is only as good as the what is underneath it. Your original base over the wood is a big issue here. Any paint job on top of that as a base will have issues. It would not be a wise investment to take that route. I‘m surprised that your original cabinet maker didn’t replace it all. That is what any commercial manufacturer with a lifetime warranty would have done. If the original maker did the subsequent jobs, I might start there with another warranty claim, To be able to paint those successfully, you would need to get get back to completely bare wood to start over. That is economically unfeasible. It’s too much labor. Labor is always the largest cost on a time intensive project like this. Stripping to bare wood is the most labor intensive process you could possibly do. Unless these are family heirlooms or antiques, it isn’t an approach that happens due to cost. You could possibly replace just the doors, and sand the faceframes and exposed sides down to bare wood, and then have it all newly finished. That’s a reasonable approach if you are DIY, as again, that is a lot of expensive skilled labor. I would have that refacing quoted from a local craftsman. I fear that it again may be pretty costly because of needing to get to bare wood. I would have replacement cabinets quoted as well. I don’t think the costs will be significantly different, due to the higher labor required for the reface rather than replace. Usually, refacing is 75-150% of the cost of brand new. “Refinishing” and getting the original back to bare wood costs more than either, unless there is a commercial strip tank located somewhere close to you. That has its own issues, as it damages the glues holding the doors together snd still isn’t that cheap. Unfortunately, neither of your proposed contractors is quoting you the job that really needs to happen.

SO- we want to take this soffit out (it is a ranch with no venting or electrical and attic space above), install can lights- What you have there is much more than a soffit. The entire ceiling has been dropped. There may or may not be drywall above the dropped ceiling; there may be insulation up there resting on the dropped portion. The walls above the ceiling may not have drywall on them. If you remove the light diffusers, you may be able to get a better idea of what is there & what isn't. This will be more costly than simply removing a soffit-over-cabinet situation. The good news is that you have attic space above which makes the electrical easier & a bit less costly. OTOH: we will be moving the kitchen and taking out walls- basically starting over. Doesn't make sense to do anything now because when the kitchen gets moved, the new lighting you install now will be all wrong; the ceiling will have to be patched/ replaced where the walls come down, electrical will have to be re-routed... For now, I would replace the cabinet pulls with pulls that have backplates--that will help cover up the peeled paint and minimize chipping--do a bit of touch up painting. Then live with it until you are ready to take on the larger project.