Here's something I saw while browsing through BHG.com's decorating gallery. I love the colors used and this advice works for low ceilings: Don't fight a low ceiling. Accent it with bold swoops of colorful paint applied freehand. Also, "modern, low-slug furnishings help make the short space feel taller."
Also, I got an great idea about using metal pegboard as wall/wall accent. It'll be pretty handy as a divider or to hang frames and family mementos.