How can I update the back of my cupboards that show in my dining room?

Paint ?

Frames as panels, molding, and paint.

Mind you, it depends on the color of your furniture and your decor. And the size of your room.

I would tend to stain it a bit darker, so the grain was not quite as strong. And hang a couple of prints that made me smile and brightened the room, and me.

Of course, you could just primer/paint it to match your wall color. This would be my preference. It would visually integrate your kitchen

But I still love art on the walls. The lighter surface will likely make the room look larger.

PUT CROWN MOLDING AROUND THE TOP AND THEN SAND THE BOTTOM TILL IT'S SMOOTH REMOVE DUST,PUT TWO COATS OF VARNISH SAND BETWEEN THE COATS STAIN DARKER IF YOU LIKE.

Pretty contact paper

I was thinking paint it a color to match the wall and then hang a shelf at the bottom.

Or...paint and then add the decorative frames inside. You can buy frames at Dollar Store if you want and hang them first and then paint all at the same time.

Once you paint it the area above becomes usable too, oohhh! The possibilities are endless.

Since it faces your dining room, treat it like it's part of the dining room. Paint it like the rest of the room and then decorate the surface to tie in with your room's decor. Maybe hang a collection of mismatched pretty plates. If the wood is solid, you could hang a shelf near the top to display pretty bowls, pottery, or glassware with a collection of plates below the shelf. Use this area as a feature for your room. Best of luck.

I would paint it to match the walls then hang pretty china and paintings to compliment my decor style. I do like the idea of adding crown molding and framing the whole thing to give it a finished look.

I have found some cool stick on wall paper at Walmart for my area above my cabinets, and also used it beneath my countertop in the 'bar' area.. Looks great and was easy to apply. This really dressed up the room.