EVERYTHING! This is the old kitchen in the even older house we have started to renovateStrip everything out, wash nicotine from walls & ceiling and paint (colour undecided), replace cupboards with lime washed or antique white timber, stainless steel bench top that incorporates gas rings and sink on left side (no wall cupboards on that side), Dresser style cupboards on right hand side, maybe an island bench, knock window into french doors to bring in more light, Marmoleum on the floor (probably red).....once the builder has opened up the room by knocking out the walls framing the picture!

I'd be inclined to move couch & armchair along wall with large recess if they will both fit. Mount TV onto flat wall opposite. You could have a low unit to house electronics, or use the one you have. Have purpose-built storage cabinet w/shelving built into smaller recess. Some of the shelving portion could be backed w/mirror to help throw light into room. Use the shelves for books, objects of art, photos etc., and the drawers or cabinet below to store things you don't want on show all the time. I also think a large area rug will ground the family room area from dining/kitchen. A neutral one perhaps or you can inject some colour. Large art pieces on wall as mentioned. A largish plant in a raised pot would add some greenery. You may find you need a floor lamp near couch & chair. Regarding the kitchen, I think you might be able to fit a narrow timber sideboard at end of island bench so you have some additional storage there. I say timber because it would warm up the coolness of kitchen. I agree undercabinet lights good idea for additional task lighting. You could either go mirror backsplash or some gorgeous tiles. As there are a several changes you want to achieve in this space, it might help to do it in stages. Storage seems to be a priority (fam rm & kitchen) and rearrangement of furniture & TV. I would tackle this first. Additional decor ie rug, art pieces on wall(s) could be addressed next. Then splashback and some additional lighting if budget allows.

White on White Dulux. :)

We recently updated an apartment to sell and got great feedback from the buyers on the paint - Dulux 1/4 Lexicon low sheen on walls and Vivid White high gloss on doors, picture rails and trims.