Maybe put a rectangular table against the brick wall that can be pulled out when you have a full table. Benches can be stowed under the table. If you can store/ use chairs elsewhere in your apartment, that could work too. I do recommend having a bench along the outside length though, because it will make the space more navigable and streamlined. If you are on a budget (who isn't?) Ikea's Bjursta table is fairly narrow considering how long it can get.
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I would do something funky that plays off the urban feel, rather than tries to mask it. You can get some colored privacy slats for the fence (this is just one site- I didn't look around for prices http://www.discountfence.com/Slats/aluminum%20slats.htm). I like the idea of Christmas lights and a few plants if you can afford them. But I'd spend my money on a big table and comfortable chairs- you're friends will be delighted no matter what it looks like!
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