wow! Thank you everyone!
Definitely storage with cupboards to shut! We'll be using it as a movie room (for the family on weekends, and evenings when our own kids teens), so we'll have a sectional and tv unit there as well (with toy storage). It's hard to balance daycare and also family space. But it's just for once in a while, so no biggie.
Where would you have naps? I was thinking of creating a little nap area... the space around the laundry room will make an L-shape. I was thinking the nap area in that small part. Or would it be better as a small kitchenette? Or just more room for an activity spot?? Ah! lol