I would hold off. Is it marble? Is it original to the house? Your house is older and the fireplace did work at one point. Have someone in to find out what the problem is and whether it can be fixed. Then think and think some more... In other words the only thing I would do immediately is get rid of the paneling (it might be brick underneath) and strip the paint off the mantle and surround, which is VERY pretty... This house needs tlc by undoing the various "updates" from past owners...

Taking Erinsean's idea about adding drywall to the front of the hearth, here are a couple more ideas. I have kept your existing wall decor, but there are certainly other options there as the wall becomes more of a normal backdrop. Here's how it might look if you drywall over the stones and the face of the hearth and then grey was the hearth and put some slate around the opening with a white mantel surround and our Carolina Window Pane Fireplace Door. To achieve this look you would need to float the fireplace opening out with bricks before installing the slate. Here's the same concept without the slate and mantel just using our Legend Fireplace Door with Custom Tuscan Leaf Surround. You cannot use drywall right up to the fireplace opening because it is combustible, so you would need to float the fireplace opening out with bricks and then plaster over the bricks to finish flush with the drywall. Bit of a challenge, but doable. Hansen Wholesale specializes in Custom Fireplace Doors.

paint it white, and paint the surround with matte black heatproof paint. it will look great -- google "white brick fireplace" for inspiration. if you wind up not liking it, you can always tile it later. I'd keep the mantle and hearth the way they are. but if you disliked those, I'd try either staining them dark charcoal, or replacing the mantle with a simple wood version.

If you really are keeping the floor tile, LOVE the vanity in the first batch of examples with the very deep marble countertop and grayish vanity. I would have the vanity the blue of the floor tile though. The reason I’m loving the thick marble is it plays off your coffee table. Anyways, honestly, the floor looks really old and 80s to me in a bad way. Everything else is beautiful though...how old is your home?