Looks like you have several things to consider in the layout. What the view out the window ? Do you really want to see more of whats outside? Cooking is always best on the outside wall to get it vented, island cooking is a last resort, downdraft dont work well at all and the island hood is typically obstructive. Looks like the wall should come out to open the space up. Best advice is to have a designer come to your home and see it in person. There are costs associated with every change and it is very difficult to judge just from photos.The design phase is the most important part of any kitchen remodel the builder is only going to install it as the plans layout. Find a great designer that makes house calls :)

The first thing I require each of my clients to do before even starting the design layout is to choose their appliances. Your kitchen designer will need the manufacturer's specifications to know what size to make the cabinets to accommodate them. Be aware that there is required distances needed around and island, typically 36" up to 48" depending on placements of appliances. This will dictate the size and shape of the island. Clean lines, simplicity, innovative materials like glass countertops, exotic woods or Italian veneer slab doors, flip or lift up doors can add unexpected touches to a modern/ contemporary space. Here are some photos of one of my favorite Euro Modern kitchen I did for one of my clients not long ago.

Beautiful clean modern kitchen! You have a great opportunity to put your personal stamp on the space with a unique backsplash. As you've heard already there are some different approaches. I'd probably place the backsplash up to the wall cabinets and up to the base of the hood. Then continue the backsplash at the same height (18"?) behind the sink. Then place an inspiring colorful picture above the sink to break up the wall. Here's a picture with pendants that aren't too obtrusive. Having multiple levels of lighting at different lumens makes a more inviting feel to the space. I couldn't decipher your flooring, but you may also want to consider adding some nature elements like a type of wood flooring, wood stools, etc. Good luck! If you need software to plan out materials check out our Home Designer software: http://www.homedesignersoftware.com/

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.