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I agree with the others. Replacing the floor tiles is a major hassle, as it would be very hard to go under the cabinets to remove existing and add new tiles (you can't just put new tiles on top because there'll be significant elevation change and trip hazard). As to continuing the wood floor, it will be extremely hard to match the finishes. Laying melamine or linoleum on top of the floor is easier, but if there's no threshold, the new floor may tend to peel up from foot traffick. Your best bet is to put an area rug.

CollageInteriors@gmail.com

Hi Dianne, I think all the pieces in the room can work quiet nicely together if arranged properly. You've created a beautiful feature wall, but the things you are showcasing are a mirror that reflects an opposite wall and TV (and space heater?). Placing the sofa by the blue wall and hanging artwork above it will make a beautiful focal point. The heater can then move to the left of the sofa (you can ask your contractor to hide any wiring behind the base board) and the chair can be placed on the right, creating a nice seating arrangement. Your TV stand can be moved to the opposite wall of the sofa. You can paint/replace ceiling moulding to match floor baseboard, which will add warmth and tie the room together. Here's a quick sketch I did of your room: http://m1342.photobucket.com/albumview/albums/CollageInteriors/673AEC97-99F6-4B34-8507-BE2AA81446B9-6757-00000426C26D8C53_zps06b1b6d8.jpg.html?o=0&newest=1

You are welcome to email me for more ideas at collageinteriors@gmail.com

I'm a start up interior designer/architect and I may be able to help you with your space planning issue free of charge. Just send me a photo of your space and a floor plan sketch of your room, and I will do the rest :) Just the photo may be sufficient, but the more info the better.
CollageInteriors@gmail.com