What's so great about Handy Manny?

I mean his tools do all the work right? He just sits back reaps the benefits and takes all the credit. I need a job like that!
This is just one of the observations I've made this week while on vacation.
We're still working on plans for the big toy room remodel, but at my insistance they are on hold until later this week. DH wanted to just clear out the room and move toys. I put my foot down, insisting if we're going to do this then we're going to do it right. If I can't hang drywall and replace carpeting I at least get to fix it up to some of my semi-standards. I know I promised pics, but it being the storage room for all of Santa's presents things were a bit crazy this past week. We're also at odds just which room to use.
Upstairs is typical of the bungalow style homes in this area. 2 rooms with entry to one depending on the other. Currently the back room is my office and the front a guest room. DH wants to leave the guest room as is and dismantle the office. I'm fine with that ... however ... I think we should move the guest room and put the toy room at the front of the house. There are many reasons for this.

1. It's bigger and has 2 closets for storage.
2. The back room is the entry to the whole upstairs. Meaning there is an open landing to the staircase and a 1 foot edge that runs along above the steps themselves.
3. If we do have guests I would prefer them not to have to stumble through the toy room to get to bed.
4. The doorway is easily gated.

So we're at a standstill. I plan on hitting the store for some paint samples this week although DH is still against painting the paneling.
I'll win though, I always do. ;)

Jules?!! I need you!!

And any other inspiring designers out there. We've decided (thanks to the jolly one in the red suit) that we're going to bite the bullet and convert the upstairs office to a play room.
The problem? We have no 'extra' money to do it the way *I* want to. So I'm forced to work with what I have.
What I have is dark wood paneling and bright blue shag carpeting direct from the 70's. Ugly in all sense of the word. I need ideas. I'm not adverse to painting the walls, anything is better than living in a wood pile. I want a fun place for the kids to play and relax that also fits in with the style of my home. Some toys will be staying downstairs but 99% will be going up. Eventually the girls will move up there to share a bedroom as well, but not until they are self-sufficient enough to come up and down the stairs themselves.
So please help a girl out. I've never been one to have decorating woes, but would love to have some feedback and ideas from others.