I think there is enough room to treat it like a room. I would furnish it with sofas, outdoor rugs and a table and chairs. I would put plants in massive pots so they need infrequent watering. I would likely add some interest to the walls with climbers and trellis and mirror. I would also consider privacy so perhaps a parasol or sails or a pergola?

I think the idea of a border next to the raised patio would look better than a fence or railings, partly because I don't think a fence would be a nice view from your patio doors. I would have railings to the side of the steps only, perhaps simple cast iron. This isn't a great photo (fifth photo along) but it shows steps going down with planting either side which I think would look best http://www.stephenlacey.com/uk-garden-design.htm

Hey! I can't advise too much on the woodwork but I think a fresh coat of paint would give this a new lease of life! Maybe get some climbers to wrap themselves around the wood - white and green is a lovely light combination.

Sooon sooon soon :) Next year!!! I can't wait!!!! I'm so excited! Thank you for all the ideas :)