After we removed the too-big area rug, we really considered not having one at all. I think because of the somewhat odd entry/family room function of this comfortable-but-not-big space it created strange visual and walking spaces in the room. Our house is flipped, so the main living areas (kitchen, dining, office, living room, bedrooms) are all upstairs.

The pillows look tired on that lovely couch. Find something that has more texture and bulk, and also larger as suggested. I'm afraid the coffee table doesn't do justice to the furniture and rug. I would find one made of glass and metal, with a lower level for added storage room. You can still put your feet on it; we've been doing it for years without any damage. The one you have also looks very narrow in relation to the furniture.

A picture or two would help greatly, if you can post some.

Replace the torchiere with a floor light that direct some light down. Move the sectional away from the windows Do not swag your drapery panels Replace the wall art with a size more appropriate for the space Lower the TV Get a longer media cabinet or one that floats on the wall Move the orange lounge chair out from the corner Add an accent table next to the lounge chair Provide a flexible coffee table, maybe one that lifts up if necessary Select an indoor outdoor light colored rug to brighten the area that can withstand kid usage.