I like it. Is it cutting edge trendy? Not even close, but I like it. It's homey and comfortable. If it were mine, I wouldn't paint. If you paint, you're going to have to paint not only the shelves, but the lower half of the walls and the ceiling beams ... and in the process you'd lose so much warmth and character. If you feel you MUST do something, I'd do the fireplace in a white wash -- a dirty white wash that'd allow a bit of color to show through. You could test this: Tape up some white paper on the fireplace and live with it a while. I wonder how much of your dissatisfaction has to do with lighting. I see you have several lamps burning. What if you could do something along the lines of in-cabinet lighting -- you know, like they do in kitchens -- in the shelves. Or what if you bring in color in your furniture? Instead of painting the room itself, bring in a RED sofa ... or paint the (completely removeable) table and TV stand a bright color.

Using river rock or grave as a general mulch is often not recommended but it is often used as a border or under-eave drip edge, as a wood based mulch can encourage termites. A perfectly acceptable usage! You don't really need both. One or the other is fine and I don't understand the concern about the rocks touching the plastic. As long as you are careful with the application, no harm will come to either the rock or the plastic. I understand a desire for using plastic as a water barrier, but if you go that route, make sure it grades at a slight slope away from the house so the rocks don't sit in a wading pool when it rains ;-)

If the rest is oak, I'd paint the walls to get a change. The other option is black. Black shows every spec though! Had a black cabinet in a bathroom, never again....

This site is notoriously glitchy when it becomes to posting photos. What a beautiful space, and I would leave the fireplace alone, as it definitely complements the serene flow of the space. If you paint it, you'll create something of a choppy look in that direction. It's perfect just as it is now.