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Bead board, wallpaper, tiles (real or adhesive) depending on where you are using this. Is it Kitchen? Attach an oilcloth table cloth to the wall behind it, using the pattern you choose. To expand the area, use a door mirror turned horizontally, attach to the wall. Take a hint from your surrounding area and colors.
How about stenciling the area? It is not hard to do and you can customize your colors. about the chairs, it depends on what you use the area for. If it is for computer work or homework, then leave the chairs, if not, then cabinets or shelves depending on your taste. Shelves with decorative baskets or used as bookshelves would be really pretty.