We did hardwood in our upstairs hall (with wood stairs) and I love it. It allows you to use different color carpet in each bedroom without it looking strange in the hallway, the way it can when the bedroom carpet meets a different hallway carpet. It also allows you to replace the carpet as it needs replacing without having to replace all the upstairs carpet. My neighbor has hardwood downstairs, carpeted stairs and hardwood in her upstairs hallway. She loves it also. Totally Confused

The first thing that strikes me is that your curtain rod is too short which is why you have to push the curtains to the side which kills the vibe in this room. Get longer rods and linen-type curtains that are fairly similar to the wall color which will give the room warmth without looking busy. Please make sure that your area rug is as large as possible because that will make this room look fabulous. Little bitty rugs do not. I would choose an Oriental rug in warm colors because it will hide little accidents, at least until you can address them. I would definitely get a sofa, so great for cuddling with your husband and kids. I would place it in front of the window for good lighting for reading but also because it gives you the best sight lines into other areas of your home. Instead of a coffee table consider a large ottoman with a lid so that you have plenty of storage space. Please don't buy a brown or black leather couch. They look dated and are so difficult to decorate around. Try beige or caramel, with two chairs in contrasting colors, perhaps a nice blue or green, colors that will be in the carpet hopefully. You can also use the carpet colors to choose pillows for your soft furniture. Find some nice pictures to put on the walls, a large green plant, a bookcase or two (books are a must in a room) and side tables for lamps. By now your room will look gorgeous and be pretty well furnished and, most important of all, will be comfortable and fun to be in.

Thank you all for the great ideas x I have been trying to stay away from the full boxed in unit as i'm afraid it will make the hallway even smaller. I really like the floating shelves idea though. I have had a table under the stairs but it was the wrong style and has put me off putting another one there. I'm so glad that ive asked for your opinions on this as all i could visualise was a bench there. This is the one i was going to buy before i posted this query.I will post the "after" picture..ye might be waiting a little while though!!

I have an Eames lounger and a replica Z chair (like the one JudyG posted above), and I think they look great together! I have them placed away from each other, across from the couch. you can't see it, but the fireplace is off camera - so the couch is facing it. Looks like your living room has enough space for the exact same setup. by the way, I found that Z chair at all modern, and it cost way less than the Joybird version. I was nervous about the low price, but the frame is real wood and the build seems solid. it's very comfortable, and easy to move around.