I would be inclined to go with an unobtrusive light since it's the living room and anything too dramatic or a hanging pendant may interfere with your peripheral vision (or otherwise be an annoyance) when you're watching TV, etc. Also, being so near the sliding door, the wind may cause a hanging pendant to swing quite a bit which will cause the lighting to be constantly shifting and changing which I would personally find annoying. I'd go with something simple and subtle, but look at getting a tall standing lamp for the corner near the sofa (or possibly at the other end of the floating TV cabinet). In terms of warming up the apartment, I think you need something on the bare walls. A smaller picture above the floating TV cabinet will help to take the focus off your TV. A larger art work behind the sofa will also help to add some colour and personality, especially if it picks up some hues from your sofa. If you don't like the little Buddha statue, I would look at adding one or two other items that you do like (perhaps picking up colours from the wall art) and making a little vignette. A couple of colourful cushions and a storage solution for the wires, games console, etc on the floor would also help to bring everything together. Something as simple as a woven basket under the floating TV cabinet might help to keep the games console, etc in place unless it is in use.

Kill two birds with one stone and replace the balustrade with a full length, double sided cabinet. This will blur the height difference between the rooms while creating more if a sense of the two rooms working independently of each other, and provide a place for interesting piece or two on the top(like sculpture). In the process, you could ensure the traffic flow and furniture of the rooms works best with the passage to the lounge where it is, and if not, decide where it works best and build the cabinet either side of the passage.

Yes , my first thought was pretty much along the lines of everyone else -- a large artwork -- personally , I'd go for an abstract with that 'bladed on' look , in either tones of reds and oranges and yellows , OR several blues and maybe green and silver . Go big -- at least 1.5 metre wide by 1.2 tall . There's some cool mixed media ones available for $400-500 on-line , that have bits of tinfoil and corrugated board and the like added too -- certainly adds some visual impact . Add cushions to match , large candles on the TV cabinet in the same colour pallette , and if you're adventurous , get the blind remade or spray coloured , again keeping to the same pallette to tie it all in . OR as an alternative , how about the wall behind the couch in fake 3D brick wallpaper ( reddy/orange and cream bricks ) , and the wall behind the TV painted an earth toned orange -- the white couch and black TV cabinet and white wall / blind / ceiling would would contrast nicely -- maybe add a larger white faced clock with bright red or orange numbers -- you've gotten a vast improvement on a budget .

Ok, I see ...one possibility would be to retain the unit as shelving where it is and wall mount the tv on the adjacent wall so that you can optimise seating arrangement. Otherwise I think you are on the right track, a circular rug would work, maybe a couple of mid century chairs might look nice, you could put some trailing plants up high away from your little one, maybe a basket or two to keep toddler clutter in check would go with an eclectic kind of look. If you move to a larger space in the future, mid century chairs would be easy to pair with a couch.. I think try and bring as much storage as you can to keep the space manageable.