Done!

For tiles, we settled on something A & B.  It has some green in the tiles so we painted the untiled wall green along with the family room.

Adding the island was worth every penny.  I stand at the island while I prepare dinner looking out toward the family room.  It is far more enjoyable than facing the wall.  My kids sit at the island for breakfast.  They also sit there while I work in the kitchen.  There is an electrical outlet on the side of the island that I use when I'm using the griddle (or any appliance).  We lost some space when we added the island but we don't miss the breakfast nook at all.  This layout made the entire kitchen more useful.  

We are thrilled with the complete kitchen.  Even a few months afterword there is nothing I wish I had done differently.  Now I'm eying the basement...