Sophisticated start. You could go with black and white photography, architectural pieces, art pieces- anything you love on the wall. Then, add pillows in the colors of the art work. If you want to stay more monochromatic, think in terms of textural interest, such as a shag area rug, pillows with seam detailing, etc.

I understand going with the grey since it is an 80's style house. You could also do bright bold colors. I do not know if that is your style. I have attached a quick rendering of the gray scheme you mentioned. I prefer light colors above dark colors. This keeps in theme with the sky and earth. Makes the house seem more grounded. The dark entry also draws your eye to it especially with the light coming from the other side of the house. I have also attached a quick rendering of a blue scheme. It looks like you are on a beach and I thought this would blend in with the surroundings. If that is what you are seeking. Hope this helps.

Did you end up painting the ceiling all the same? That's what I would've done!

These spaces can look awkward but yours is quite inviting with those windows. It could become a retreat space, that allows someone to be near the action without being in it. Seating or lounging would work with the very low head height. I could imagine it would be a great spot for a couple of cool beanbag seats, a small funky bookshelf and a sleek retro lamp, or if you have children to cater for a games setup with storage in a retro ottoman.