Depending on you budget, I'd replace the counter tops and flooring. I agree with removing the dark valances. Replace the top corner cabinets with 42" cabinets or remove entirely. The ones there are too small for the space. An island, not that you need the counter space would cozy up the area. Also replace the front on the dishwasher with stainless steel to match other appliances. Your layout is good, no changes there! If you decide on an island, you could include stools there and remove the current peninsula, this would open the area to what ever room is adjoining the space. Good luck and have fun. It is a really nice space.

So you dont think we need bench top on both sides?

I agree you probably need to centre the vanity and the cabinet on the wall or they could look a bit odd! You don't say why you don't want a space between the window and the vanity - just my opinion, but I would think 300mm could be quite useful for a bin, a clothes basket or box, or a small stool for putting clothes on? The only alternative to leaving a space, is to fill it with something as the response above suggested. To avoid it interfering with the window, you could make this something lower, so it sits level with the top of the vanity. This could be built in and the wall lining put over it to create a single "shelf" level with the underside of the vanity top, or if you can find some freestanding open shelving of the correct width, which could also be cut to the correct height, you could wedge that between the wall and the vanity side when fitting the vanity. Just bear in mind also, that you'll lose some of your towel hanging space if you put something too high in the space.

A lovely rug on the floor would be nice. You seem to have some space, yet your table is pushed against the wall. You could consider a bigger table for centre of the room or making it into an office / desk / book shelf / comfy chair. You have lovely sun coming in. Even a bean bag and a small coffee table could make a difference. A medium sized plant would also look great. Set a budget and stick to it, re-purpose things if you can and / or buy second hand so you don't break the bank. I love the little air vent on the floor it looks like a little mouse house. Maybe you can get some removable stickers and make an art piece or at least a little mouse running to the hole.