Difficult Questions: How To Heal This Room?

(Image credit: Apartment Therapy)

Dear AT, We have a very small guest room (approximately 9′ x 9′), with those old 50s wood paneling and a tiny window in the middle. Their combined effect is, of course, a dark prison looking room. Now that someone is actually sleeping in it, I feel the need to do something about this room….

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(Image credit: Apartment Therapy)

Here is what I would like to do:
– paint the wood paneling, fill up the grooves, to give the illusion of normal walls
– find some kind of small storage like a tall, narrow chest to put in the room because besides a closet, there is no other storage space
– hang some wall art and add other accessories

Now, my most urgent question is, what color should I paint the walls? We thought of very light blue or yellow, or eggshell, but I just wanted to get some suggestions from people who actually good style, hehe…

In case the picture is not clear, my bed is silver steelish, night stand is ivory with artificially made worn edges (from crate barrel), and curtain is navy blue. No I’m not going for any nautical effect.

I would also like to replace the black display stand in the corner with some kind of storage, but the space is tight, and I couldn’t figure out what I can put in there. The only thing I saw that probably would fit is the 4 drawer cube cutout dresser (http://ww2.westelm.com/cat/pip.cfm?src=&pgid=f057&lid=268435456&gids=p009&cmsrc=rel), I would love to hear other suggestions on what I can put there. The bed is full size. Even if I have to leave the black display stand, I’m wondering if it fits in the room, because it is the only black object in the room.

I never decorated a room before, but I have become addicted to AT, and this would be my first attempt. Any advises would be greatly appreciated!

Thanks, mimi.