If you DO go with large black and white photographs, I'd paint that inset bit of wall a totally different color from that that white. At the very least, I'd do some kind of mid-tone grey, but I'd really rather see it be more of a specific color, like what looks like a green in your rug or something. In fact, I don't want that upper part to stay white either. A second photo would help a lot in seeing what all is going on in the room, though.

If you're going to get that mirror, I'd kind of prefer it be horizontal, and better yet, two of them in that inset space.

those mirrors are atrocious.. and man would that give you a cluttered look for sure!!!

that inset is sweet tho. if i were to add any paint, it might be a nice light grey on the inner edging, but i like it plain white.

I like the pictures idea, would look great with 6-8 Fjalsta frames in the 19 3/4" x 19 3/4" size. http://www.ikea.com/us/en/catalog/products/30109782

or

i like the ribba with some depth that makes is look a little like a shadow box for the prints because of the 1 3/4" depth on it.
http://www.ikea.com/us/en/catalog/products/20078050

both of these are about $20 per and are quite stylish looking.

that is indeed a sweet space to decorate for sure.

That wall is crying out for a bold color! I'd like to see it painted a deep purple with a large square black and white photo or canvas offset to the left and a large chrome arc lamp coming in from the right side. The purple will add some warmth to the black couch and a chrome lamp will tie in the couch legs. It will be a simple, sophisticated and uncluttered focal point.

If you're worried about clutter, that mirrow seems rather busy and is the wrong proportion for the inset space. I'd go with either one large piece, or a few that clearly work together and are hung in the same frames. If you hang several pieces in the space, then painting the inset a different color would help the art look more like one piece, and would also make that whole area into your "living room focus," which seems like a smart delineation to make in a studio.

If the "inset" is truly inset at both ends, why not pull the couch out to the level of the front wall and create a built in look with shelving across the length of the inset portion of the wall? White shelves with whatever items you like might be a nice way to decorate and create more storage.

I agree. I'd paint it. I am usually anti-accent wall, but this seems to be an appropriate.

I LOVE hmr's idea of built-in shelving...although that is more work/cost than painting it. Agree with the majority vote of color inside (if not doing the built-in).

I think the b&w photography thing is way overdone and won't add that much interest to the space.

Seems like with those huge windows, you get plenty of light (assumption) so don't think you need to do the mirror-thing to expand the space. Keep going! I love what you have so far (leather couch, cool rug) and think you need to trust your good taste more.

p.s. I don't think that mirror is atrocious - just too busy for that space! :)

i'm another who is typically anti-accent wall... but i would pain that inset something colorful in a heartbeat, and then hang some black and white photos in there. i wouldn't hang anything worth looking at on the top wall... too high.

I'd leave the walls white, but add a colorful element on the wall in the form of a large brightly framed horizontal mirror or circular mirror. Or in one large colorful piece of art or 2 companion pieces--whether they be favorite photos you've enlarged and framed in extra wide mats and frames, or some other form of art. Using color from the rug is a good idea too. I love the Eagan mirror from Pottery Barn, but I don't think it's an ideal fit for your space.

I'm no professional, but when we were looking at houses we ran across one with a very black and white theme in the bedroom and a giant POP of red and yellow in the form of a vintage photo and a couple accents. So if you don't want to paint the wall a brighter color maybe add some crazy color in the art.

Another vote for custom shelves.

I love the idea of shelves.
You can always just buy a tall bookcase or 2 (or 3?) of them, and just put them behind the couch. I think that would look great!

Why not do a floor to ceiling curtain wall across the width of that wall forward of the recessed area and use the area behind the curtain for storage.

http://www.flickr.com/photos/ravdesco/382532481/

Everyone is always looking for more storage space. Because the curtains would be very large, you could have them altered to fit a new space when you move.

My first thought was built in enclosed storage (doors) with a media center for the TV. Something along the lines of Poliform's Wall System, Jesse's (much less expensive) Regolo System (picture 06), or a hybrid creation of Ikea kitchen cabinetry designed to achieve the same effect.

http://www.poliformusa.com

http://www.jesse.it/ing/products/day-area/regolo-system.html

Hang a large horizontal piece or artwork in the inset that is the width of the couch ... nothing on the wall above.

If you choose to go the painting route...

I recently saw somewhere (probably hgtv) where they painted the room and then used blue painters tape to mark off horizontal stripes within the alcove type area. They painted the alcove two shades darker and left the stripes (under the tape) the lighter color. From what I remember it looked pretty nice and, from what I can see here in your picture, your place looks like it would look great with a wall color. Might be worth a shot!

This would be nice if you like greenery (and you refinished their box to match your decor):
http://www.thegreenhead.com/2008/01/indoor-living-wall-planter.php

Gives you fresh air, evolving living art, helps to muffle sounds.

Where did you get your rug?

Hey, I swear I had this problem. You prob should move your sofa in front of the window. It's on the wrong wall. Right now it looks like a couch in a box so then you are trying to put a mirror and a couch in a box or frames and a couch of the box... make the contrast of the ceilings interesting instead of defining that they contain the couch, then designing around it. The Eagan Mirror is stunning and it totally plays off that spectacular view!! The squares of the mirror will mimic the buildings in the city view & the rectangular & square design of your cool sofa. You are right on with your picks, so don't listen to the people that are telling you to get rid of the mirror. You love it, so "MAKE IT WORK!". There's a reason you love it & I bet it's to widen the space & mimic the boxed theme. If you move the couch, add the mirror, and put a coffee table to anchor the rug (Tanner cube from PB (for a small space), you can add dimension with nuetral colors to the walls w/ paint, but for now, go with your gut! Super cute place. I love it!!!