Cover the whole wall with the curtains. You have a lot of pattern in the room already; I'd go for a solid color, maybe even close to the wall color, to keep everything looking calm.

Love the curtains-in-the-wall-color idea. I'd hang them behind the nightstands and just covering the edge of the window. You won't be closing them, so a single set is probably enough.

I might choose a yellow color for the curtains to pick up the yellow in the rug and quilt. I think AT also has a round-up devoted to beds in front of windows-- you should try searching for it.

I'm going to try to explain what I have in my head since I can't find a darn picture!!

If you got a double curtain rod (basically a secondary rod that nests inside the width of the main fancy rod) you could have the main curtain span the entire length of the window and act as a visual headboard defining the bed area on the wall. Then the other curtain, in contrasting color/pattern that you like could be gathered and cinched in the middle and sort of redefine the bed area... sort of like this image, but don't put two cinched curtains, just use one and center it. (and ignore the fabrics used as they are too frilly and fussy):
http://image.dhgate.com/albu_158206565_00/1.0x0.jpg

You can play with the cinched curtain's folds and cinch tightness to get some visual interest and definition and I really think it would be pretty and slick if you found some curtains that you really liked...

That wall of curtains is a nice idea. If you wanted to keep the louvered blinds you can go with a pelmet over the window and add sheers or regular curtains. Or, you could remove them and add a roman blind under the pelmet.

Take stationary panels from the room's corners to just overlapping the inside edge of the window. Hang them from track as close to the ceiling as possible. Pull the color from the wall or rug.

how about a nice clean roman shade with a lovely valance to set off the window? I might be in the minority here, but I think that curtains would be too much for that small wall.

I agree with the curtains behind the bed/nightstands. I almost think you could get away with cutting one panel in half since it's such a small space. I like the idea of a solid in either yellow or maybe the creamy color of the rug. Good luck!

Keep it light. I once combined Venetian blinds with long French-style voiles edged in bobble trim, drawn back and held by ties, a little like this http://www.curtainsandcurtains.com/images/P/Faux-White.jpg
Looked good

Agree with above! (curtains).
That is an amazing rug, where did you get it? Thanks!

you can fit a tension rod wall to wall with no fuss and a clean presentation - right up to your ceiling. a cheap white one or a nice metal one. looks like white sheers or semi-opaques (4 panels) would look great. light filtering,airy, and crisp. but maybe you want something more drapery weight.

ikea has an awful lot of options that should suit.

Just pull everything out from the wall a few inches, it will fit fine and look great. Here are a few examples (hope the links work!)

all the way across the wall

across the wall and a bright color

slim with a valance

sheer and sophisticated

I actually had the same problem in our tiny bedroom. We ended up putting our bed in front of the window and covering the entire wall with curtains, as has been suggested in previous comments. This blog post I wrote about our apartment gives you a view of the bedroom, and here's a direct link to an image of that wall.

Overall, it was an easy project. I bought some ivory sheers for the outside and thicker, light-blocking ones for the inside so it wasn't completely obvious that there was a window hiding behind them. I just used a cheap, white, extra-long curtain rod, which the curtains covered anyways. Make sure to measure your wall so you get the right length/width of curtains. In the end, I just needed 4 separate panels. Good luck!

Go light or go big -- nothing in-between. I think you could do a streamlined-valance window presentation (like in Tequila Red's link above) that would essentially turn that fabric treatment into your headboard, and that would personally be my pick.

@JKMNY That's an Ikea rug

I say simple sheer curtains that cover the window and maybe extend a bit beyond.

I would go with the images Tequila Red provided. They're all good options depending on your tastes etc. Though I do have to say the though the valance one is my least favourite.

I think the whole wall option would work given that you have a headboard. Without the headboard I think it would look funny.

Oh, forgot to mention... as long as you keep your material on the lighter side (weight wise) or in a sheer fabric I think it wont end up looking too heavy.

I have a similar layout and the curtain behind the bed works great, but I live in a cold climate so I opted for an insulated curtain that helps with drafts. I have it in a matte satin that helps contrast but not remove from the other fabrics and patterns in the room. It blends but doesnt stand out too much.
I am curious as to where you got that gorgeous area rug?

Wow, I love the ideas Tequila Red offered. Those seem to be in the right direction if you want drapes.

Where did you get that chair in the corner? From what I can see I love the pattern.

@cycollege - The rug is from Ikea. I'm not sure if they have it anymore since I couldn't find it on their website (Canadian site)

I agree. Cover the wall with draperies wall to wall, floor to ceiling. it will make the bedroom pop!

I was going to suggest the same things as THEMODERNGAL. Simple sheers. You can get them in faded colors or even patterns; anything else, I think would eat up the room.
BTW: Great job on decorating the room. Looks nice.

I would go with the simple sheers, but would also look at putting some paintings, in similar frames, two on each side vertically, just to fill those spaces...

A picture's worth a thousand words: Tequila Red's images show some great options. Nice job so far!!

Colored sheers invariably look cheap. Stick with white, off-white or ivory. Regardless of how wide or long you go, calculate 2.5 times the width you want to cover for your drapery. 2x is a bit thin, and 3x can be fussy.

I suppose the big question is whether you need to open that window for ventilation, or do you rely on air condiitioning? Do you need light control? If I were finishing that room, I would use a translucent shoji screen in front of the window (the paper can be replaced with laminated paper or other materials for durability), but that's my aesthetic. If you don't need light control or extra insulation, generously gathered linen sheers hung from the ceiling would work well. I would not run them across the whole wall, however.

(BTW, you can have shutters made that have shoji panels instead of louvers. They would fit flat inside your window, for a very clean look.)

What about a fabric Roman shade instead of the mini blinds. They can be cheap or expensive. They come in all sorts of colors,even in a natural bamboo ect. It would give a more finished look without junking up around the window. That way its stays simple, and clean looking. You could even choose the light blocking kind for more privacy. Or go with the light weight fabric ones for filtered light.

I'd like to know the name of the wall color. Thanks.

Another vote for the floor-to-ceiling curtains across the whole wall..Cute chihuahua!

My bed is in front of my window too. Makes the room seem bigger and it's really the only logical place to put my bed! I just have blackout curtains over the window because I sleep during the day!

Covering the entire wall with drapery sounds great, but I found it to be a tremendous dust-catcher and even though I didn't have allergies, I would wake up sneezing, despite diligent vacuuming and cleaning. Also, it made it really difficult to [a] open the window on a nice day and [b] let some sunlight in - there was too much fabric to handle. I ended up using a custom-fitted Roman shade. I spent a bit on the fabric and it turned out almost like a piece of art on the wall - everyone who sees it comments on how great it looks there. Plus it is easy to move up and down. On wintry Midwest mornings, I need some sun to cheer me up!

The pictures Tequila Red left are wonderful.

Tequila's photo of "sheer and sophisticated" is my vote! Light and soft enough to keep with the airy space - which I love by the way. The bed is the exact width of window, almost looks like it was by design. Always thought that rule was dumb anyway because a window is the ultimate headboard/focal point.

The scale of the wall does call for a uniform pattern and/or color. A tighter, more architectural version of the above would be to wrap panels for the walls right and left of the bed with fabric, then install a matching fabric roman shade, overlapping the panels slightly. It is a bit of a retro look but that just be what you wanted....

My Old bedroom had the exact same problem, I did a curtain the same color as the walls, with a headboard. I didn't try to hide the fact that there was a window behind it, however the window was not exactly centered with the bed, so I made the illusion that it was, by hanging a rod the length of the bed (hard to explain, see: http://gallery.apartmenttherapy.com/photo/la-haleyforgehousetour-bethanynauert/item/267717) I thought it work well for us.

I would get a basic roller shade and stencil a silhouette of a big chandelier, headboard, your chihuahua or whatever else you like. To fancy it up, you could also add some trim around the edges and maybe a DIY pelmet box made from foam board and fabric. There's a tutorial for that on the Little Green Notebook<a> blog.

Found some old posts AP that could be helpful, here is the link

http://www.apartmenttherapy.com/small-bedroom-solutionuse-the-81840

and #7 in link below
http://www.apartmenttherapy.com/inspiration-floortoceiling-dra-93000

Thank you all! For the questions: the chair is from Ikea with a custom cover (don't remember that source, it was a long time ago) and the color on the walls is Sharkey Gray by Martha Stewart.

You have a lot going on in your room with the different patterns on the lamp shades, rug, etc, which looks great! I don't think you necessarily need anything else! I too have this bed in front of window dilemma, and just go with it now with simple wooden blinds.