We are going with Sherwin Williams Rain in our dining room, laundry, and a half bath. It is a blue with gray undertones, in my opinion. I bought one of the small sample sizes from sherwin williams to try it out to be sure and it is beautiful! I got the inspiration from this house...http://hallmarkhomesinternationalblog.wordpress.com/2011/05/03/wilson-bridge-wine-dine/

Your room looks very nice with the curtains removed. I would encourage you to leave it as is in regards to drapes. This is a more contemporary space and there is no need to guild the Lilly! The shutters are enough.

Hmm, thank you for all the suggestions. The black trim is certainly going, even if painted or washed in the same color. I may consider the light grey wash for the near future to keep a natural but modern look. I will certainly take the advice of not painting with much of a sheen as well if thats the route I go. I really like the idea of building a wood surround and painting that white, but I do wonder about the color of the hearth remaining black if i then go about painting the wood trim surround white. I came accross this which inspired me to have a black fireplace, but i suppose it is a different look than what is already there. I was hoping to keep the cost down, but its not put of the question for a diy job or maybe adding it to the wish list down the line. As far as decoration- i do like the boho style, but my choice of decoration hasnt been leaning that way and it would clash. I do like the yellow though. Last, but not least, when the kids grow up more in a few years, i am flirting with the idea of moving the coffee table into the family room & play around with a different coffee table to better fit the room and fireplace if needed. Anyway Anyway, thanks again. Any other suggestions would be appreciated.

Thanks everyone! The major piece of furniture is a medium/french blue sectional that I love, and it does bring out the blue in the rug, and a dark grey media cabinet. My dilemma was do I go with a greyish/blue paint, which was my first impulse, and suggested by many of you, or a warm white with more "orange" undertones since the orange is opposite blue on the color wheel and would therefore potentially enhance the blue in the rug. But I definitely don't want the walls to look orange. Can't do photos yet as it is early in the construction phase- just framed out. Thanks for the lighting concern, I will have at least one lamp down there, but we are investing in high end recessed so it should be pleasant, and not like a garage or workroom. I also understand that other design elements will make a big difference, but we are talking about 1100 sq ft of carpeting so it will be a dominant part of the design. Just looking at swatches (carpet swatch next to paint swatch) I like BM Beacon grey... but am concerned it will read baby blue once up on the walls...