I like the idea of neutral for a baby room because you can just change the linens and accessories with each child This is more practical if you have a small home. I love converting a dresser to a changing table.
This is a nice-looking living room with smaller rug. Perhaps the key is to frame the rug with sofas / sofa and armchair combo / sofa and the window. And another trick is to fill up the room so the size doesn't look awkward.