Paint the ceiling a darker color than the surrounding walls. This effectively lowers the ceiling. Paint the walls a rich, deep color in the same tone family to foster a sense of coziness. For example, you might paint the ceiling a deep gold and the walls a medium shade of gold or toffee.
Install sconce lighting on the walls that reflects down toward the floor. At night this will help the ceiling above fade into shadow and focus attention on the room below. Use table and floor lamps for spot and accent lighting.
Use fabric and texture to create a rich sense of coziness. Cover the windows in floor-length draperies, add rugs to the floor and drape a plush throw over the back of the sofa. Fabric adds warmth to the room. Fabrics in similar or complementary patterns and colors can bring different elements of the decor together.
Arrange the furniture in intimate groupings. Instead of putting the furniture up against the walls, bring sofas and chairs in, facing each other, to foster conversation and the idea of an intimate gathering. Use rugs to define different areas in the room, such as a reading nook and a space for talking or watching television.