I think there area a lot of things you could do but it depends on the "feeling" you want to give the space. Modern? Traditional? Wild? Also, I would want to try and find a color upstairs that I could pull into the stairwell or landing so that it transitions well. You said the walls upstairs are Vanilla ice cream (yummy) - but what are the accent colors in the upstairs rooms. Any bright warm blues? Reds? Oranges? Light greens? Warm colors are great for small dark areas. Esp trimmed with pure white. I would avoid pastel or greyish tones. So little light will only make those colors more dull. IMO I'm personally partial to yellow. My northern facing small den and kitchen area are much warmer and feel brighter painted yellow; more than when they were beigey-white. And yes, it took a LOT of samples to find one that worked in every light and corner of the room. But it works (all the trim is bright white.) The yellow follows one wall up into the landing space of the stairs, but then the wall of my VERY dark stairwell is bright white with a sheen to make it reflective. I did hang artwork on the landing to pull the colors together. One painting on the yellow wall and one on the white wall - both the same artist, feel, and related colors. I like it. Another thought, is to incorporate stripes (I'm getting into stripes lately. You could do the foyer in a warm color, but on the wall that extends upstairs (and maybe one other) paint bright white horizontal stripes. That gives you color but lightens it up. And the horizontal shape will help make the space look bigger. On another thread, as an example, someone posted this link of aqua and white stripes. http://www.thehandmadehome.net/2010/06/the-veranda/ Another idea is to keep it all the same color as upstairs, but add marvelous art and lighting fixtures, and maybe jazz up the risers of the stairs. Here's another post I found in FW that has some GREAT ideas you might be able to use: http://ths.gardenweb.com/forums/load/decor/msg071758089676.html Here is a link that might be useful: aqua stripes

And in Sarah Susanka's books, somewhere she mentions such a situation. And her approach includes the option to add a piece to the ceiling which defines the small area devoted to the entry. You put the special flooring down, and it is also good to define the entry CEILING as well. Especially if you can add lighting there. In another of the HOUZZ idea books, they had a square open back shelving unit which they placed instead of using the sofa as a traffic director. The spaces were squares and they added nice baskets to many of the spaces. If you do shelving there, and the room is small, keep the shelving without a back. Unless you make one end of it the area for a coat "locker",,,,,in which case it can become a "mudroom." I don't think a formal console table would be appropriate in the kitchen area, but a piece that looks like a console, but suited to a kitchen, would be great. It might also serve for both recyclables such as paper recycling stuff and then winter boot tray, and a shelf above with hooks for coats or dog leashes or hats and gloves. It would be very useful if a butcher block top and wheels, so you could use it for a rolling island in times when guests are not coming over. The type of entry that OldGardener describes for her sister is the solution we have in our Cape up here in MA. The living room is small to begin with. So I put this loveseat perpendicular to the front wall, which creates a walkway from the front door past a console table (on the wall opposite the back of the loveseat) and it leads to the tiny coat closet and the hallway to the main bath/powder area. Actually there is only the loveseat, a lamp and small table, and two armed dining chairs beside the black granite fireplace hearth, plus the console table, in this room. We do use the space for quiet chatting with friends and family in a more one-on-one space. We have a huge (12 x 34) family room where there is another fireplace and the TV and a round painted drop leaf breakfast table, with an old sectional sofa....so the living room is a sweet little jewel of a space that provides a spot of calm and semi formality to a casual home.

You have a beautiful home! IMO, the natural spot is the storage closet area. I'm a fan of a clean entryway so I'd keep coats, jackets behind door(s) to reduce the visual clutter. Either use the closed storage you have now and place a bench under the picture, or open it all up and create a space similar to the one AuntThelma suggested. Another suggestion for opening the space up and creating a grander entry: change the swing of your front door so the handle is by the sidelight window. Since you're handy, you can leave the light switches where they are and install Lutron Pico wireless switches by the window and easily operate the lights.

That drop front desk in your last photo looks to be blocking the hallway on the left. Have you considered switching it and the table? I think you need that visual kind of weight in the entry. In addition, there's an outlet where the desk is, so you can place a lamp on the table in the new location. Generally, I don't think accent walls are helpful where there is architectural interest already built in as with your arches. Where would be your stop/start points? I like the entry to express the owner's style and hint at what's to come in the adjoining rooms. Since everything is pretty open here, I would paint the entry to match the main room it opens to. Let colorful art do the accenting.