Giavanna, I think your best best is to first settle on a look you're going for. Go through Houzz photos (do a search on Open concept living rooms) and create an ideabook of things you like. Do you like modern styles? Traditional styles? It looks like you have kids, so family friendly will likely be important. I think we need a bit more to go on before we can give you good advice.

Thank you for being clear about what has to stay, so I'm going to deal with your "givens," the built-ins and sofas. --Is the current carpet in good shape and comfy for the kids? Of so, get it cleaned and leave it. It harmonizes with the fireplace, and kids live on the floor. You can get hardwoods when they're older. --Choose a much lighter and warm cream/taupe wall paint that goes with the carpeting and stone. Sorry, honey. That will NOT be gray. Other Commentors will make some good paint suggestions, taking into account that you have a lot of outdoor greenery that affects paint choices In good natural light, take a close up of the carpeting if you decide to keep it. If you need curtains for privacy or to dim room, match them to the paint color--ceiling to floor length. Also need to take into consideration the kitchen area wall color. Can you show us that? (Always show all walls of an open space when asking a Design Dilemma.) --Rethink layout to create TV conversational zone and a kid zone. TV/Conversational zone: Move wider sofa to face the fireplace and the smaller sofa to face the great outdoors! It looks like nature is right there, so it's an extension of your living room. Don't block the great view! Move the smaller sofa against the wall so it creates an "L" with the wider sofa. Put a large, colorful, circular storage ottoman in the "L" or two colorful smaller storage ottomans. Some of the spillover of toys and such can go in there. Put tray(s) on top of ottomans when entertaining. The one below is kind of fancy, but there are lots of storage ottoman options out there. --TV conversational zone.:Move TV to one of the built-ins since those are one of your givens. I'm going to say something sacrilegeous: Get a TV that fits in one of the built-ins. --Kid zone. This will be a play area between the kitchen and the TV/conversational part of the space. Get open wood shelving, sofa height if possibl to go against long sofa. Get baskets for the kids' toys. The finish should be the same as your wood trim. You're sure to find bookshelves like that on Craigslist. Down the road, when kids are older, you can get a lovely sofa console cabinet to use as a buffet. Lighting: Proportions will be important. Something in a wood finish but with modern lines would be great. Here's an article on measurements for different sized rooms, tall ceilings, etc https://www.lumens.com/how-tos-and-advice/how-to-choose-the-right-size-ceiling-light.html.

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I admit to anti- sectional bias, but the smaller the room, thd more I think a sectional is very limiting EXCEPT for a small media room that isn’t cut up by a lot of doorways. And I’d furniture is mostly for racking back & watching the TV. I think your bd better off with sofa and chair or chairs plus the concept of bringing in a dining chair, folding chair; having a modestly sized ottoman that can be moved around, or a rustic coffee table you can put feet on. You’re more likely to have a greater number of options for size, fabrics & comfort levels than what’s offered as sectionals. Now if when you say you “ like to entertain “ you primarily mean having people over to watch the TV ( whether shows, movies, sports) and then maybe , but, guests are not as likely to want to cram all together on a sectional, as compared to families that specifically aim to snuggle with kiddos.