The family room functions as a gathering room, media room, and play room. It is comfortable for every member of our family. Aesthetically not much has changed in this room besides for the addition of our furniture and accessories. I did change the window coverings to match our furnishings, but the rest is original. Once the girls are older we dream about exposing the hardwood floors, changing the paneled walls to drywall, and possibly adding a coffered ceiling in place of the rustic faux beams. New furniture would be great as well (this couch is over 20 years old - it is comfy and teetering on being considered an antique). This room is cozy with the fire place and bright and airy with the large window and french doors.
The ottoman was built by my husband and I for around $75. It is perfect to keep toys out of sight.
This is where the fun is at!
The book shelves are refurbished kitchen cabinets that I painted and added trim to. They were completed before we moved into this house and it is amazing how perfectly the paint ("Dune" by Sherwin Williams) matches the walls. They look like built-ins and I love that! 
The child size table was left behind by the previous home owners and I painted it to match the chairs that I bought at Salvation Army for less than $3.00 each. By painting and recovering the seats, they look brand new! Such a deal. Too bad there were not three or more chairs available.
To keep clutter to a minimum, we use Longaberger baskets to organize our toys. It also makes for easy cleanup that even the kids can do, if they are willing...
You will notice throughout our home that in most cases I use photography for artwork. Nothing makes a house feel more homey than to be surrounded by photos of the people you love.
Here is a photo of the family room before we moved in:
Update:
New furniture, table lamps, and framed family photos make the family room cozy for us and our guests.
The family room is where we watch movies & warm up by the fire during Michigan winters.
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