That layout is the same as ours apart from upstairs, our bathroom and toilet are one.
We were originally going to go through lounge and redo the kitchen, but the kitchen space was more important to us, hence us going for what we did. I think its going to work alot better for us, as we will be able to spend more time together as a family in that room, it feels more open and spacious already and then the front room, will be the living room where we settle down in the evening to fall asleep on the sofa in front of the TV...lol!!
A mate of mine has the same layout too and he went through lounge and extended the kitchen back and around the patio door, so it was L shaped creating a seperate kitchen and dining room. If we were going to stay at our place long term, then we would defo have done that, but as we are not, didnt want to go crazy spending money when we can use it in the next house.