Much as I love wood blinds, in your case I would go with the white. I'm afraid the wood blinds would chop up this expanse of windows where as the white would give you a blank slate. You could always add color in roman shades, etc. (Love the flowering trees!)

Thanks for all the great ideas everyone and sorry I didn't explain the polycarbonate a bit better :) This is along the lines of what we'll be using... http://www.psp.co.nz/building-brands/corrugated-sheeting/suntuf-polycarbonate The area is an absolute sun trap and we're hoping to use it as an extension to our living space, especially on rainy days! I've just sent my husband out to get a few pots of different stains for is to try - darkest brown (cedar) and a lighter brown (rustic oak) both by Cabots + the black we already have. Hopefully we can decide between one of those! I probably should have mentioned we will have black aluminium pool fencing running along the top of the second retaining wall - so the real question is do we keep everything black (pool fencing, horizontal fence, retaining walls and pergola) or do we go with a dark (or even light) brown for the pergola and retaining walls.... We just keep going around in circles at the moment. Decisions, decisions! Thanks again :)

The first thing I would do is switch your light fixture to track lighting. That way you can focus the light onto that wall much like what is done in an art gallery. I also think that may stop the reflection you are getting. I think putting cabinets on the long wall will really close in the space. I would make your red wall your gallery wall. I'd frame everything in white so they "pop" off the wall. The problem with the other wall being the gallery wall is that it's just to narrow. You can't really stand back far enough to see the art.

I was about to say grey until I read the last line. What about a light brown carpet?