Keep traffic pattern, entry/exit points and open space within the room before you plan seating. Keep all the foot traffic to one side of the room if possible. Your goal should be to accommodate at least 4 people. Consider the functionality of this room while designing - is it going to be a formal or an informal room?, media room or game room or office room, storage needs for books or toys or media?, etc., so that you can bring in the design elements. Ideally, television should be placed 12-15 feet away from seating to be able to enjoy it.
A light or neutral wall color would work the best in smaller rooms in general, but that does not mean, your accents have be light too.. you can brighten up the place with contrasting colors. If you have a high ceiling, use it for open shelving, open book shelves, large vertical art work, vertical mirror, etc., With all this said, I have some beautiful living rooms for you..
Look how beautifully the long sectional sofas fit in these narrow rooms. The "L" shaped sectional has elegantly replaced the traditional sofa and loveseats creating an informal and cozy environment.