Funny I was just at freinds who have the same white throughout their kitchen so I was thinking that's it that's the answer it all has to be the same colour as the cabs and I read your response and it occured to me that the white in their kitchen is the same colour as all their trim througout the house. I'm leaning to keeping the baseboard the same white as the other trim and ceiling (particularly considering the kitchen has 2 doorways into the other room), as you suggest. Thanks for the advice.

Don't know how old your son is, but it could serve different purposes as he grows. It would be a nice reading spot--rather than building in a bookcase you could do shallow wall mounted book racks (Ikea carries them). As he grows older it would make a nice desk/study area. And kids always love little nooks and crannies to play in, so a little bookcase could hold his favorite toys. I would consider having a wall mounted fixture wired now, though, as you need lighting for reading/studying. Love your windows!

Our wainscoting was done like the top photo and had baseboards. The "lip" of the baseboards covered the seam between the blocking behind the baseboard and the bottom rail of the wainscot, if that makes sense. I prefer that look. Edited to add: Just be prepared for the extra dusting that wainscoting will entail, especially if you have wainscoting with 90 degree corners. It catches everything, especially on stairs where the intersecting trim creates tiny little grooves that you can't get into with a fingertip and dust rag. DH says never again will he allow me to have it :)

The cabinets and bed are to go along the back wall as seen in the second photo, with a vertical Queen bed dropping down in the direction toward the ping pong table. It's hard to tell from the photo but there's still several feet of room around where the end of the bed would be and the ping pong table. The kitchen cabinets may be outdated (built in 2005) but we aren't interested in modifying those at this time, that's just not in our budget. This isn't a rental, it's in the basement of our home. Over the years we've had many guests and family members come for extended visits and they've used an air bed, the Murphy bed would be more comfortable and cabinets are intended for storage. Thanks for the comments so far, I'm thinking I need to look at more photos and trends on Houzz!