I would suggest you take out the cabinet that is to the right of the stove and use it elsewhere in the house -- perhaps in the bathroom or dining room with a hutch above it. Then, I would suggest you have someone install a lazy susan cabinet in the corner between the sink counter and the stove, meaning you would move the stove down a bit and have a small cabinet/counter top to the right of the stove. I would suggest you have the cabinets refinished in white and then paint the walls a pastel you like. If you would prefer white walls, then add white-painted crown molding and paint the ceiling a light neutral blue, such as Sherwin Williams Niagara Falls Blue. Then, I would suggest you choose a favorite accent color and use this sparingly in accessories like towels, pot holders, small vases or floral arrangements, and a valence above the triple windows. For a genuine 1940s look, you might have white ceramic square tiles with a rectangular red border installed as a back splash behind and above the stove. If you are replacing counter tops, I would suggest a light color such as white with a beige or light grey vein or striation for some sort of pattern. You might be able to find the same color and design in floor tile OR opt for a wood floor as another poster suggested.

congrats! first, sand prime and paint out those cabinets....i'd go with a grayish shade of white or pale gray that will work with the flooring. i'd also carefuly chip off the yellow tiles. since on a budget, consider applying some beadboard as your backsplash, painted in a glossy, oil based or marine paint in a crisp white to keep it scrubbable, then, dress up the edges with some small mouldings, painted in the same white paint. this is going to be SO MUCH less costly than tile! and it will look great with the butcher block countertop. you can probably refresh the butcher block with a light sand and oiling. you could even get an additional piece of butcher block (ikea) and create a step-up 'bar' for some stools on the peninsula for some casual seating. then get a pair of pendant lights to hang from the pot lights above (they make lights that insert directly into the pot light...no hardwire necessary).

Your suggestions are really greatly appreciated. My town house unit is under complete exterior re-cladding works, prompting quite substantial interior makeover (i.e installtion of ducted air con, replacing wall to wall carpet with timber upstairs, and tiles in open space downstaris, replacing creamy wall paper will be replaced with neutral white paint. So my green kitchen with creamy formica counter (bench) top should go. I don't hate green simply had egounh of it after long 15 yeras! My small U shape kitchen is due for complete makeover, I think! I'll probably go with new cabinets (lower one for microwave) up to the ceiling, when move fridge at the end I'll go with panel with matching colour up to the ceiling, expanding counter top on the other side to the fridge. I guess that removal of the cupboard can be compesated with extension of the counter top so we can fit 3x drawer underneath and cabinets up to the ceiling can provide some useful storage space. Backsplash in same white palette or darker in contrast? Your kind ideas please!

This made me laugh: http://www.theguardian.com/environment/2016/jun/09/seagull-turns-orange-after-falling-into-vat-of-chicken-tikka-masala I couldn't copy the picture, but it's hilarious.