What colors-design would you choose?  

INTRO- DON'T PAINT JUST YET
It sounds like what you're suggesting is just copying the stripe from your carpet-tile pattern onto your walls. With your open floorplan- the faux oil painting in the ornate frame above the piano, and the dining room set with the persian rug, it's going to clash. I'd reconsider, think long and hard before you go down the path you've chosen... sorry, that sounded a bit heavy, didn't it? But seriously...
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PART 1- DON'T PAINT JUST YET
Firstly, I'd do some rearranging- The chrome/brown and the Eileen Gray table are awkwardly crammed over in the corner by the piano. The ottoman you speak of reupholstering... forget it. Junk it. It doesn't look to be of the quality that it is worth the investment and it is in the way, anyway. Instead, take the plant and whatever it is sitting on (a trunk, or some kind of end table) and place them beside the piano. Move the brown chair with the matching ottoman over to the other side by the sofa, with the Eileen Gray table in between the chair and the sofa. Take two or three of your favorite photos of the children and have them blown up large, 8x10 or so- place them in simple matching frames (1" black with a 6" white mat?). Take down the painting over the piano, and hang these large family photos there instead. You can move all the tchotchke like family picture clutter on top of the piano to a dresser in the bedroom. You're not being 'cold' banishing them out of the living room, once you have the large family photos hanging. It will de-clutter the space. As for the faux painting... throw it in the garbage, sell it at a yard sale, donate it to charity, your choice.
Embrace the contradiction-
If you're going to have these disparate styles in your home, mix them up. Right now there is this strict division between spaces and the styles of furniture in them that clashes. I recommend one change and one more purchase that would unify this space, and really change the look of your home:
1.) Swap the carpet tile in the living room and the large rug in the dining room. It will bring a contemporary look to the dining area, and tie the living room and dining room together. The persian rug with make the living room more sophisticated and tie it back to the dining room. (ok, some maybe you'd also have to add a few more carpet tiles to cover enough space for the dining room... it's marginal.)
2.) Throw out that dining room chandelier (see faux painting) and buy a really nice modern/contemporary fixture. Have a look DWR.com or Ylighting.com . Some peices to consider are listed on links below (the Caboche Chandelier if you can afford it, or the Le Klint Pendant #171 if you're on a budget).
This is the small budget solution to your space that I would recommend. Between the cost of the photos and framing, and the cost of a new lighting fixture, you could do all of this in an afternoon, spend less than $1000 and your home would have a complete face lift.
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PART 2- DON'T PAINT JUST YET
The two items that are really killing your space are that faux painting and the dining room chandelier. You must part with them, even if it is painful. You will look back on it as the day that changed your life... or at least your home.
I'd also lose that floor lamp that sits at the threshold of the living room and dining room. It's not hideous, it just breaks that wall unnecessarily, like some wall marker dividing the two rooms. moving that one piece of furniture will make you space seem larger. Then you could also move that credenza piece over and center it under the TV. Right now it looks a little cramped.
Back to the original topic- If you painted anything at all, I'd consider painting that one wall behind the TV continuously from the living room space to the dining room space, to pull them together. You have all of these great plants. If you did paint that wall I'd steer you away from this blue/gray brown trap you're in and consider a pale green that brings out the plants. I cannot see what is outside of all those great huge windows you have, but if there is greenery out there, it could bring that together too. I really think you don't really need to paint, but if you're looking to bring some color in, this is how I'd recommend doing it.
fyi- You have a really really great open space with huge windows. It's not militantly modern or in-period chic, and I think that is why you're post is getting the brush off on this board. High-design snobbery goes down here. With only a few tweaks and a few dollars spent I think your home could really be smashing.
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Image of the Caboche Chandelier
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http://www.european-lighting.com/images/product_images/popup_images/161_...

Image of Le Klint Pendant #171
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http://us.st11.yimg.com/us.st.yimg.com/I/ylighting_1892_78618334

AFTER- DON'T PAINT JUST YET, BUY A NEW LIGHT INSTEAD
The Caboche Chandelier would look gorgeous in your space, but it is a little pricey (APROX. $1500). The more affordable option (APROX. $250) would be the Le Klint Pendant #171 which would nicely compliment the dining chair backs. Whatever you choose, You should hang it lower than the fixture you have there now so people don't have to look up to see it (it will also spread light better that way). Never underestimate the impact of a great lighting fixture. It will transform your place from every vantage point that it is visible.

RE:
Oh A few things I forgot to mention.
The painting is already disposed of and the chandelier is going as well.
We were looking at this one... http://www.ylighting.com/elf9.html
I'm glad you guys share the same feelings I have.
It's my parents home so I've decided to take their older furniture and buy more contemporary pieces from dwr, bluedot, etc. They love the look since it's more simple and easier on the eye, I just want it to flow a little better.

RE:
The floor lamp is also going, I'm glad you guys these things, I thought it was only me.
I'm really not sure about the flooring, I just picked it up last week from cb2.

You know
what they say about advice being worth what you pay for it; this example is the exception ! Good work, ChrisG. . .

lighting fixture
Thanks, SDR...
Eddie, it sounds like you're headed down the right path. Congrats on your project.
One thing I'll say- the dining room lighting fixture choice will be yours, you're the one that will live with it, so if you're in love with that one, you should grab it. However, if you are still open to suggestion, that one feels too angular for the space it will fill. Look at the chair backs at that dining table. Let them inspire you.
Again, wonderful space you have. You will return to post photos, once the work is complete, of course?
cheers,
Chris

HGTV
Watch a few episodes of the HGTV series 'get color'. Is has avery realistic approach to room design focused on getting a well suited colors scheme then jumping off that for all the other elements.

RE
Thanks for the all the suggestions!
We will peace something together and will be making color choices. I am in love with the light green idea, maybe even a light pistachio.
Will post pictures soon!!