don't throw anything out. don't pack anything up. take out the s+p's. put in the fabric and see if you like it. give it two weeks and make up your mind. if you're too crowded, it may not be worth it.
as for the knicknacks, to display them without giving up any space, run a narrow shelf 16" below the ceiling all around the entire room. the shelf should only be about 3" deep. you'll still see the s+p's and they'll be out of the way. use the rest of the shelf space to display whatever. i know it gets dusty, but it's far enough away so nobody sees the dust and if you don't bother anything, the dust stays put and doesn't bother allergies. the high dust in my house hasn't been moved in a long time and nobody sneezes here. a testament to creative homemaking.
what room are you sewing in? did i miss that part?