entry way or mud room built in that has it all: seating, LOTS of storage, and a place to hang stuff. everyone could have their own cubbies and you can mix in some baskets to less visually pleasing items.
This is a nice-looking living room with smaller rug. Perhaps the key is to frame the rug with sofas / sofa and armchair combo / sofa and the window. And another trick is to fill up the room so the size doesn't look awkward.