I like the space, certainly large enough. I agree it needs some color. I'd put a valance with something bold with large flowers or geometrics. Before you cut down the size of the pegboard, reduce the amount of the stuff that's hanging on it and paint it a color that matches the valances you might put up. It might be that there's just too much stuff on it. Maybe remove the shelving to the left (left in the picture) of the blue chair and extend the shelving to the floor in the corner behind the blue chair. Then you would have some wall space to hang a quilt, put up some artwork that you love, or something else that would be inspirational to you. You could also paint one or more of the tables and put new skirt that coordinates with the valances. I have lots of ideas when it comes to someone else's room--I've just gotten my sewing space painted and when the floor dries will be moving stuff into the room. Hard to figure out how to make everything fit. Good luck, hope you post some "after" pictures.