We initially planned to tear it out and install nice custom built-ins, but frankly time and budget were limited on this project so I decided to re-purpose the existing shelves instead.
I chose a soft celadon green paint color that would work with the blue carpet. My go-to paint for brush-on furniture jobs is the Benjamin Moore Advance line. It's a special water-based alkyd formulation that acts like oil paint but is easy to use and clean up like regular latex paint. It really provides a nice glossy finish and doesn't leave lots of brush strokes.
So with a little help from my carpenter we transformed those ugly shelves in this!
Here are some mid-styling shots ...