First things first, everything needs to go. The furnace needs to be replaced (notice that lovely cardboard chimney sticking out of it? Hellloooo fire hazard) it also seems to have two different kinds of paneling, wallpaper, and just general awfulness.
I would seriously just rip this room down to the studs and start over.
While framing, I'd add another door to the pool so wet folks are coming in here instead of tracking through her kitchen, then I'd put the furnace and water heater inside a closet (much like at an apartment complex) and reroute the washer and dryer to a more central location. Thanks, Hannah, for letting me have an imaginary infinite budget.
Now, Hannah is not a crafter like me, but she is a music teacher and spends a lot of time working on bulletin boards, hand outs, all that kind of stuff. She intends on using one of her bedrooms upstairs as an office, but I think for resale value making a real laundry and craft space is essential. At least somewhere for her to store all that colored paper, right?
I would totally do something like this.
It has enough storage to help with the fact that she doesn't have a basement, but it's still open enough that she can do laundry, have a folding station, and have a giant table for her bigger projects (and a table that she doesn't have to get up the stairs to an office!) but it isn't so arts and craftsy that it feels dedicated to that.
On the far wall by where the new door would be I would add some lockers. For now, Hannah is renting out her other rooms, and that means that there are 3 or 4 girls worth of purses, coats, scarves and boots hanging around. This house really is built for a big family, so I think in the long run these will be super beneficial.
I'm also extremely jealous because a laundry room is what I wish I had in my house *sigh* some day I'll get out of the basement...
What are your dream laundry rooms like?