I have a small bathroom and linen closet. I have baskets, bins etc..
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Wow this looks just like mine. I put a towel rack and above some of my favorite pictures that I like to look at. Near my sink I used a basket to hold every day things I use. Like toothpaste. Brushes. Combs. On the other side of the sink I hung a rack for my face towels. I also put one of my baskets near the toilet paper dispenser got things I need there. Extra roll. Spray. Cleaner.
As large a mirror as possible, on the wall where you have the mirror propped. Looks like you might not have room to put anything to large on adjacent wall if you want to open the linen closet. If you do how about a collection of prints?
I saw an idea once where the person nailed woven baskets to the wall to use as shelving. That might work for you here. If you need an extra place to hang a towel, there are towel racks that hang over the cupboard doors under the sink, no installation required.
You could tile that back wall with tile that coordinates with the rest of your bathroom, and add a contrasting band of tile across at chair rail height. Then on the adjacent wall install a board with decorative hooks to hang towels. I would think you'd still have plenty of room to open the linen closet door.