For the last ten years it's been a latte brown/grey, okay greige, 3 seater. I'm loathed to get rid of it as it still is so comfy, though somewhat worn and faded. Desperately trying to the find a drill, cotton or linen in a bright teal/ kingfisher/ peacock blue to re-cover. Something like this...

It is a bit confusing when it comes to leather - there's terminology like "aniline" and "natural grain bovine" ...which can make sofa shopping even more frustrating. The leather we suggest for most families, and commercial settings is a very durable corrected grain bovine which is available in alot of colours. It's called Millenium range as happens to be the best priced leather also: https://www.strictlycomfort.com.au/leather-range BUT if you're after something very soft, and more natural looking, perhaps you would like this style of leather: http://www.leatherco.com.au/colours/upholstery-leathers/furniture-interior/laguna/3/12/80 We can custom make any of our sofas/chairs/ottomans in any leather or fabric. They're all made here in Sydney and our designers can help with some suggestions & provide quotes. Hopefully this helps a bit!

The most kid and pet friendly couch material is leather. So far our blue leather couch has coped with 18 years of toddlers falling asleep and weeing on it, cat vomit, Easter eggs melting between the cushions, spilt milk, spilt orange juice, spilt red wine, spilt coffee, and muddy dog paws. It just wipes clean. Our white leather chair is just as durable and is now 24 years old and just starting to look grubby. So go with beige or cream if you want. It would be a lovely choice, just make sure it is leather. Black or mid or dark brown would also look lovely with that beautiful rug but I think lighter colours would look fresher. Don't be at all scared to use light coloured leather.

Congratulations on your new home. I think you have been very sensible to live in it for a year before starting your decorating, it has given you time to consider the lighting and aspect of each room in all seasons as well as time to evaluate how you want to live in your home and exactly what you need. The lounge does look very big and bulky and will definitely dominate the room, so I would keep to the lighter colour. Don't worry about the kids and dirt - as Kookykaren said, leather cleans easily - sharp objects and textas are your bigger worry regardless of what colour you choose. Laying newspaper on the floor to the size of the lounge is another way of checking how it will look as it gives you a better indication of bulk than tape. I would keep your ottoman simple (one with storage is an excellent idea with the children), just a tone on tone fabric or a pattern using the colours in the rug on the floor of the photo of the lounge. I don't think you have room for too large an ottoman but I would have a square one made the same height as the lounge so when just you and DH are watching TV you can push it against the other end of the lounge and both have a chaise. You can then bring some colour with art work or some patterned cushions on the lounges.