Since the room will be a cozy-sized room, another idea would be to have shelving - the kind that are hung on the wall and not bookcase type things that sit on the floor. Of course you can have the kind that sit on the floor too, but shelving that does not take up as much floor space might really be of help. This way there would be more room for your sewing table, etc. As far as paint goes... gosh, I suppose whatever color makes you feel at home.