I think on many grounds, gas beats wood . If it helps make you more confident with your decision, I found this a useful article: Wood vs gas In the end, it's no-one's decision but yours (+/- partner's), if you are happy that you have researched it thoroughly and considered it from all angles,and you like the look of it, go for the gas. I would say that , as much as I love the look of my wood fire, I have stayed in lots of cold places with gas fires, and I love NOT having to bother with wood and cleaning out the ash, and stray bits of burning wood leaping out on to me when putting in a fresh log. The quickness and convenience of gas is very appealing.

We installed this gas log fire in our B & B which has been very well received. We wanted to provide a warm and cosy environment for our winter guests. The wooden shelf above is beautiful wood, not sure what type and there are two cupboards either side, one for DVD's games and CD's and the other houses the technology. The flue is on the outside wall behind the fire place. It is very efficient and effective. It warms the whole apartment including a separate bedroom and kitchen. I would highly recommend this type of heater which is thermostatically controlled and so easy for our guests to use with a remote control.

If you get good dry wood and for the right price I'd go with wood everytime. It burns hot, dry and clean. However not everyone has the ability to get the wood, nor has time to stack, bring it inside, etc.. I'd have a wood fire for the look and feel but just use it occasionally if regular wood supply is not possible. Electric reverse cycle is very efficient now and even better when used with solar power. Gas was the way to go for heating up until a few years ago now its back to electric again.... Keep the open fire and have electric reverse cycle as well! I'd keep the chimney but add some corbel's to it. Maybe the blue feature brick like on the window sills. You could make the chimney a feature rather than trying to do the opposite.

Base on your requirements, this plan would work and requires the least amount of structural alteration. It actually gives you a decent size kitchen. I have to say that oklouiese's plan is more common in new houses and is preferred by a lot of people. That said, new builds usually have a second lounge upstairs. If your measurements are correct, the kitchen against the back wall where the cooktop and fridge is going to be is 4079mm. Assuming you'll have a double door fridge, and a 600mm wide pantry. you still have decent bench space on each side of the cooktop. Assuming you need 1m walk way between each bench. Your island will be 2480mm x 1200mm which is PLENTY. (1.2m walk way is recommended but it comes down to personal preference and what is the most important to you.) Since the family room is not huge. If you want to use the laundry as extra pantry space it's really not that difficult to get to.