1. Just because it is a heavily trafficked area, does not mean that you need to create a straight as an arrow line from the front door to the kitchen, or from the front door to the bedrooms. YOU decide how the traffic will flow, not the laziest person in the house who doesn't want to take an extra step or two to go around a coffee table.
2. I don't know that you'll fit seven grown adults in this room. However, as long as your boys are small, they can fit. You simply have too many architectural limitations.
3. I would move the piano. Either that, or move the TV, but this room is too small for both of them.
4. I like the idea of the sectional in the corner.
The rug you liked, I can't find anymore. I found one very similar:
It is called "Botanicals" available from homedecorators.com.
Since your large window goes down the stairs, Use a Roman shade in lieu of drapes. You can double up these treatments with a woven wood roller shade beneath them for more variations in opacity as well as increased texture.
The shade below is from Pottery Barn
Add some grasscloth wallpaper. This will give you instant atmosphere!
(photo from made me drool)
Keep your moldings a crisp white. Put in a larger baseboard and case your windows. Here is a new floorplan I drew for you:
I would get an actual sectional, not a sofa with a chaise, which will be easier to find in the right size- so don't be tempted. The chaise doesn't look good pushed up against the wall. You might need to order one to get the right size in. The Ashford sectional, below, by Bernhardt, like many, are available in many different combinations of sizes. Don't get leather. With the brown in your rug, it would lack contrast and put me to sleep. I'm getting a little tired of everyone having brown leather. There are some very durable upholstry fabrics out there.
Notice that you have a chair in the corner by the closet, and so do I. However, mine is pulled out quite a bit more into the room. This does two things:
1. More interesting negative space.
2. Better conversation orientation.
The chair I selected for you is the Scarsdale chair by Bernhardt.
Do not skip the coffee table. Notice that I left ample walk space, without treating the room like a hallway. The coffee table below is from Bernhardt.
I want to talk a little more about negative space. If you were to draw a shape on your floorplan of the blank area, this is your "negative space." If your shape looks like a large rectangle or kidney bean, that is a bad thing. I sketched in your current floorplan to show you how bad your negative space is:
On the other hand, if you find that your negative space shape looks more like below: that is a good thing. This is considered more interesting negative space.
So that it all sinks in, everywhere you go, start looking at the negative space. How is the negative space in your best friend's house? How about your childrens' bedrooms? What about the patio? For a textbook explanation of negative space- check out this post. For some super bad negative space- check out this post.
One last thing. Notice those plants I drew in? Those are actually super important. Go get yourself some of those.
Oh yes, and the deer head isn't working in this space. (I said it really nicely huh?) If he could put that up while you were out of town, you can do all of this while he's out of town. Especially the wallpaper. Husbands always say "no" to wallpaper. Next hunting trip is now called, "Wallpaper Weekend!"