I'd make sure whatever shade of teal you choose complements (it doesn't need to match) the SW Lagoon in the adjoining dining room. The bottom shelves on the tables aren't in play that much because of their size and the fact that they're horizontal and quite low down. It does sound like you have enough grey in the house, especially in nearby rooms. And I think a sofa in grey or any other non-complementary tone will keep the space looking more "cluttered" than you want it to. Having the new sofa and wall color in complementary shades will make for a well-considered, purposeful, cohesive look. Not at all cheesy or whimsical.

Molly not really i don't like recliners at all as they are bulky and personally i never felt comfortable in recliner couches. but 90% of the leather furniture are recliners so I don't have lot of options, the one i mentioned i felt comfortable so am planning on 3 seater ( couch) and 2 seater ( love seat). here is the link for the couch i liked. still need to go measure the living room personally and see how far these are coming. if not will look for something else which might fit in our living room space. But my confusion is about the color to pick. Note: the link is for sectional but i am not planning on sectional at all, we have option to buy them as required. https://www.livingspaces.com/pdp-marcus-oyster-6-piece-sectional-wpower-headrest-and-usb-228319  

I‘d start with the slipcover, as they are not easy to find regarding decent fabric quality, size and shape. Suggest blue, white or green and add cushions that complement drapes. I‘d skip a brown rug and wait until you decide on color scheme. Consider your taste/comfort with mixing patterns; see above. Use a textured rug to make it easier to coordinate around and if your preference is a solid.

Thank you everyone for taking time to respond, I really appreciate it! It sounds like people like keeping the walls a white/cream neutral, but I should focus on getting the lighting right and maybe tone down the door into the side room (currently painted to match the walls in there). The space has no overhead lighting so I definitely think that's part of the problem!