I would start with updated appliances and possibly a focus over stove. The counter tops and splash could be upgraded to a more current material and look.if you are going for a contemporary look glass tiles would look great. It would be helpful to have a plan so you could execute a cohesive look and do it in stages. I would suggest talking to a professional kitchen designer even if it is at a big box store.

I would do a glass splash back [ this can be painted in your color choice to suit the decor ] - taking from the bench top up to the bottom of the range-hood on the wall of the stove. The window is beautiful and I would give anything to have them in my kitchen. I would probably paint OR stain and apply marine grade vanish to the would so that any moisture would not be able to ruin the wood. I would also put herbs or flowers there. Could it be made into a servery for outside maybe ???

I think we are going to use the white subway tile to keep the budget down as I priced new tiles and it would blow out the budget. Really like the contrast grout idea to add a bit of texture and pattern. My partner is a builder and he loves the reclaimed wood shelf idea as we have a lot of spear old wood left over from the renovation. We have made a dinning table and fire place mantel from it already so it would tie in really well.

I do not have any tiles in my current house but if you think about grout discolouring and looking bad.... then I think that might answer your question. My thought - the less grout the better.