Well It's not my house that I live in, but I will answer anyways. This whole house needs to be renovated, which is from the 1970s and never once has it been updated. Though since this is about just one room I would pick the kitchen or one of the bathrooms.
For the kitcken, it's pretty much a thin hallway type kitchen, so I would push back the one wall into the front room. Either push the refrigerator further down the wall and add more cabinet and counter space between it and the oven. Or I could take the sitting area and place it in the family room area to make it the sitting/dining area. Then extend the counters to where it use to be and then place a decent size island where the table use to be. Paint the walls, new counters and cabinets, new tile flooring.
For the bathroom, mainly new plumbing system, new cabinets, change the light fixture, change the tile flooring, paint the walls (or wallpaper). I would replace the whole tub since it's a pretty narrow tub.