This is a major task, but we have 2 rooms in our home with amazing vaulted ceilings, and what makes them so great is that there are wooden beams running across the room from where the ceiling meets the wall. It makes them cozy instead of imposing, while still offering large, open spaces.

I wish we had a better understanding of the floorplan, but I cannot stress how much large scale art and art walls will help make the space seem much less barren. You also might want to start mixing in some furniture of different heights--add in some wingback chairs. When the height of all of your furniture is within a couple of inches of each other, it makes it all seem squat.

Your parents are lucky to have you help redecorate. My parents would never give up that level of control.

I agree that large scale art would be wonderful. And I am a HUGE fan of clocks. They do have some giant prints at Ikea, but you could also do some other photos with it to give it some presence.

I meant to put a link in to an earlier post about how to create a gallery wall, which might be something your parents would like instead of going out a purchasing new things.

http://www.apartmenttherapy.com/dc/how-to/how-to-create-a-gallery-wall-138573

A floorplan would be helpful...
...but the way to deal with high ceilinged rooms is to work with the height - not ignore it:

A large ceiling fan or chandelier hung from the ceiling helps bring the ceiling lower - so does decorative ceiling treatments such as paneling and beams.
Floor to ceiling draperies at the windows actually help make tall windows feel more human-scaled.
Artwork that's hung gallery-style (one above another) helps fill the wallspace.

This might be a space where creating faux raised paneling with squares of molding on the walls, and the interior spaces painted a bit darker or lighter than the rest of the wall would help.

Otherwise large painting/s, a large grouping of smaller art, a big tapestry, a mural, or some largish vinyl stickers (birch trees??) might do.

Floor to ceiling drapery panels, even fakes only at the ends of the windows, would also add softness and drama.

Think TALL!

I've seen people put crown molding around the 10ft or 11ft mark.

Even if the footprint is small, you have the advantage of a larger space and can do all the things that would overwhelm a low ceilinged space.
As everyone else has mentioned take advantage of the height to hang some great lighting, larger pieces of art and use colour on the walls.
Congratulations on being brave enough to take your parents on as clients. I'm impressed.

Large Scale artwork will definitely help fill the space but I encourage you to not feel the need to fill the entire space with art. Paint would help too. Consider many different wall fillers like mirrors, wall-mounted shelving, etc. (good example here- http://www.erincondren.com/blog/wp-content/uploads/2010/07/NAte-berkus-apt-elle-decor-writing-wall1.jpg )
OK, what I would do is this- I would choose a nice, warm, but pretty sublte color for the walls. I'd place a few smaller pieces of matted and framed artwork in a 'cluster' above the piano, i'd place a large leaning mirror between the piano and the sofa, like this one from ikea -http://www.ikea.com/us/en/catalog/products/00081591
Then I'd do a dramatic/substantial piece of artwork (canvas?) over the sofa, keeping the center of the piece at or just above eye level. This leaves the higher part of the wall exposed, letting the new paint color create the dynamic up there.

OK, that's my 2 cents! Good luck! Oh, and any re-decorator needs to have the decor bible - http://www.amazon.com/Domino-Decorating-Room-Room-Creating/dp/tags-on-product/1416575464

Long dramatic soft textured curtains and valances, and a few pieces of well chosen artwork and/or shelves would do the trick!

Oh and the spotlights don't do anything to soften the effect of the high vaulted ceilings and blank walls.. I think you'll find that if you use table lamps etc to create subdued, warm lighting closer to the ground, everything seems cozier. You can still turn on the spotlights but keep it low.

I have large vaulted ceilings in my wood paneled room. There are wooden beams running across the ceiling. Three wall of windows. But here's the trick. vertical blinds are just 90" high with a wooded valance. over each. I placed one over sized picture with a display lamp over one of the windows. Built in bookcase on the sides of the window with the picture. Each window has display lights under the valances. I live in the woods so the light is not great so I have 10' corn plant that takes you eye up with the average height furniture it breaks up the height. Very interesting table lamps and its just wonderful. Which I could provide pictures. Contrasty I hope I painted a picture with words. I forgot to say since the light is not so bright I have a wall of different sized mirrors over the entertainment unit.

Forgot to mention my decorating thought is all about texture. You could bring more texture in and do the decorating not so pricey.

Depending on the level of redecoration in your parent's house, I would suggest mounting a picture rail, then painting the wall under the picture rail a darker neutral with a lighter neutral above and on the ceiling. This is something that's found often in classic San Francisco houses, and it lends an airy, but still warm and cozy feel to tall ceilings. As an added plus, I'm totally in love with the hook and string method of hanging pictures! It adds a vintage charm to all of your artwork.

What bepsf said.

http://www.elledecor.com/image/room_finder/89+4371?page=62

http://media.photobucket.com/image/recent/blulabelbungalow/PrestonLakes031.jpg

http://activerain.com/blogsview/965822/soaring-ceilings-what-on-earth-to-do-with-them-home-staging-interior-design-tips-for-lofts-open-plan-homes-part-2

http://www.homedit.com/how-to-decorate-a-living-room-with-high-ceilings/

I was going to suggest painting the lower portion of the wall (i.e. up to the height of a regular, non-vaulted ceiling) in a colour, that would make the room feel cozier.
But I also second the suggestions of large art or a gallery wall. I hope you will post the result.
Good luck with your project!

Paint the room then decide

Piano is OK - someone uses it (sheet music) sofa sucks - toss. Chair is awesome keep - I assume sofa and chair face FP. Here's how to paint. Where the slope of ceiling starts make a point. Start here and draw a line that runs parallel to the floor accross top of the wall. Everything above the line paint dark, very dark. martha Stew paint at HD has some very rich browns or grays. Everything below the line paint light. Don't throw in an accent wall it will be too home done. Whatever fabric you pick for the sofa - match the lower wall color to. Pick a ready made sofa so mom and dad dont freak out on price - go high, tight back contemp if they go for it in a light neutral. Anything really just not rolled arms or clunky. NFW loose cushions. Match the lower wall color to the sofa but do it in a semi gloss finish (all the dark above the line is flat) the paint store people will argue just ignore. Loose the floor lamp. Two cool sconces above the sofa, between which a fun art piece with height (not busy though, minimalist) If you can find old pic's you could do a series of four, enlarged, gallery wrapped (haggle with local vendor rather than online). Also a funky low lamp on the piano to the right away from the window. I'll bet mom has some weird 70's number somewhere that you could spray paint and update with a barrel or rectangle shade (cheap from that swedish store but will need a little easy reworking to retrofit) The place will be spectacular and you KNOW they'll be dragging the whole complex in for a look see.
Best, Rolyn

Thanks for all of the suggestions! This is my first real interior design attempt so I appreciate your input - I will make sure to re-post with the finished product!

I would paint that wall a different, but warm color and add in some artwork. You could do one big piece or smaller pieces grouped with the number of them being odd (1,3,5,7 etc.)
I would also lose the couches, as their really slouchy.
You're so lucky that you're allowed to decorate your parents home. I can barely decorate my own home without my mom trying to take over :-p
Good luck!

Go to an art supply store and buy a long piece of canvas off a roll (probably 4 ft wide x however high your ceiling is). Paint it Jackson Pollock-style or hire an artist to paint something abstract on it. Then hang it near the top of the ceiling's highest point so it hangs down to the ground.

My first thought was beams, but that would be a lot of work. I vote for a large, dramatic pendant/chandelier of some sort. Hard to discern scale, but maybe something along these lines: http://www.rejuvenation.com/fixshowC321/templates/selection.phtml?n=v&tab=specs.

I feel like the problem isn't necessarily the vaulted ceiling but rather the ratio of the room's footprint to the vaulted ceiling. So, it seems you may want to bring the ceiling down to better match the size of the room. And one way to do that would be to hang something overhead that gives the illusion of a ceiling of some sort. Hence the pendant/chandelier suggestion.

In this case, I feel like art going all the way up the wall may only highlight the problem by drawing the eye up the wall rather than keeping it in the room where the people are. But that's just my impression.

our living/dining room is a good size with vaulted ceilings, we actually had a few faux beams that we decided to take out. we put in a ceiling fan with a downrod that drops over the living rom seating area and a pendant over the dining table to anchor the 2 spaces and they give the feeling that the ceiling is a bit lower which helps the cozy factor. Textiles are important too, curtains hung high and wide, rugs, etc. We also wanted large scale artwork but didn't have $$$ for it so i bought a fabric marimekko shower curtain, (the tuuli trees one) we made a large frame and stretched the shower curtain over it for a HUGE piece of art. it looks great and fills the space with something i love on the cheap! Varrying the heights of furniture or adding some hanging pieces- cabinetry or shelves can help with drawing your eyes horizontally around the room too. We have a long credenza for our tv with a long wall mounted cabinet hung above that which draws your eyes around the space (ikea besta)

Have you considered getting an art ceiling? or a wall print? prints and images does not have to cover the full wall or ceiling, it can be just a part. You can also check out stretch ceilings www.universalceiling.com - these ceilings can be lowered to any height, and have many other cool features