We have a frameless shower enclosure for a neo-angle shower and I personally wouldn't recommend doing it. The new thin-line European-style framed enclosures are almost as good-looking, half the price, and won't leak. I disagree that your existing tile is 'classic'. I think it's low-end builder grade, and very tired looking. You need to be absolutely sure your tile guy is correct in thinking he can tile over the existing floor. Has he done a deflection test? If not, get thee over to the John Bridge forum where you can find out how to do one. Here's a suggestion you may not have thought of. Call a local bath reglazing vendor with good references, and price out what it would cost to have your wall tile repainted. I'd do them a beautiful, glossy, crisp white, then paint the walls a nice rich medium-dark brown or slate gray. It's usually inexpensive, and will make it a breeze to keep clean because the grout will be forever sealed. Keep the ceiling white (this keeps it from feeling like a cave) and if there isn't any crown molding, get some. A small bath like this needs some nice style touches to give it a more luxurious feel. I agree with replacing the toilet with a glossy white one. But I'd use one of those half-depth vanity cabs with the sink top, for storage and space-saving. I know there are better quality ones than the one I linked to below; this is just to illustrate the style I'm referencing. Here is a link that might be useful: Half-depth vanity with sink top

Thanks again for all the good feedback. Moving the water heater out of the bathroom will be a last resort if we just can't figure out a solution to keep it all in there, but I'm determined to try my best first. The paper cutouts help with trying out different arrangements. My preferred option would be New #1, even if it makes the plumbing more complex. The water heater could be enclosed and have some towel storage above it, too. Using an 18" deep vanity should leave plenty of space to walk through (maybe I wasn't very clear in my original post, the width is 6' to 6'6"( that wall isn't in right now), so it is flexible where exactly it will land. I tried to use some actual product dimensions. Let me know if I am missing anything. New Option 3 is just a more elaborate version of the previous idea. This is really the only one I can see that could have a plumbing wall and still keep everything in the bathroom. A sliding door in the shower should work better than a hinged one, it will be a tight squeeze, but should work, at least on paper..... Option 3 is the one mentioned by wdccruise, where the water heater gets ejected. Critique away if you have anything I should know :)

"Must have is 2 vanities, toilet closet, tub and separate shower. Vanity and toilet closet are marriage peace makers." My idea kept both vanities. I simply suggested switching the location of the vanity with the tub on that left wall. If you must have full walls and a door for the toilet, you must. I'm not a bath designer so don't know the minimum footprint required for a water closet. Did I read correctly that your husband stores clothes in his bathroom vanity drawers? Does the bedroom lack clothes storage? Without changing the location or size of any element, I'm not sure how many different layouts the designer could have proposed.

You may have already thought about this, but dimmer switches will make whatever lighting scheme you decide on more flexible. Also, think about where furniture will be before placing the recessed lighting. 18 months ago we moved into a 25 year old house that had a finished basement (also with some windows, like yours). While they at least had dimmers on the recessed lighting, the placement of some of the cans was puzzling, even considering where they had their furniture when we saw the house before purchasing (the previous owners did the basement fit-out). I like the one room that has cans in the four corners and a central fixture which is a semi-flush 3-light (the cans are placed about two feet from the walls). The result is that the room is lit very evenly without the use of any table or floor lamps. I use the room for an office so I have a desk lamp for task lighting. Even if you don't use the other part of your basement, if you finish it so it could be used for a family room it will be good for your resale value. The next owners may want to put their teenagers down there with a big television. :-) I love the idea of the full bathroom. That is something I don't have in mine.