Hi hjwiley, I would recommend covering the niches and drywall over them. You can consider a simple piece of mantel across the entire wall for a clean look.

Paint it!! Paint the brick will make the wall look larger. You can paint the drywall above an accent color to display accessories on the mantel or you can paint it the same color and the fireplace to add height and add a favorite piece of art!! I would anchor anything you add on the mantel and not hang anything on the wall.

I agree with Dytecture and cover niches with drywall. Then cover the bottom surface with backerboard using construction adhesive and 1 inch cement nails then tile it with a ceramic tile of your choosing. You could use any wall tile and size you like. Add a new mantle. I did the same with mine and was amazed at the surface

Covering the top portion of the fireplace is beautiful! Makes that wall feel so much larger too!
I wouldn't waste your time painting the brick. It will still look like brick but covered up.
In additional to tiles, you could also do stone veneers. These come in different styles and colors and look fantastic!!

I wouldn't hang pictures on the drywall, but maybe some architectural thing, such as a branch.

I vote on covering the whole thing in ledge rock stone veneer. That brick is not very good looking with all the skattered white bricks and very dated design. Time for an update for sure !

If you are looking for cost effective .... paint out the brick. Your other option is to cover it with a new veneer. Go with the paint! If you hate it, you will cover it!!

I just googled painted brick walls--there are tons of pictures. Look at them and see what you like. There is something called "parging", which is an old fashioned way to cover brick with mortar. It is described on EHow. http://www.ehow.com/how_12131333_cover-up-exposed-brick-walls.html. But I suggest you google and look at painted walls.

If only the heat of the fireplace weren't bad for your wine collection, this would make the perfect wine wall. And even if you're not a wine person, you might get lots of visual ideas from searching Houzz Photos for 'wine cellar.'

I happen to love the brickwork, but not its finish -- the random blacks and whites here and there are dated but not in a classic way. The bones of the wall I think are great, and I would take your wainscot color all over the brick, and the white from your walls into the niches. I'd also continue your white crown molding across the top.

You have a great spot for a wide screen tv over the fireplace, or a horizontal mirror if you prefer. And you must have some fabulous pair of treasures to display in those charming niches? Maybe plants while you shop for those? And I just saw a fireplace screen that would showcase rather than cover that darling arch -- hmm, where did I stumble on that?

If the expanse of brick is still too much, you could stack some wood on the hearth, and with a couple of large chairs on either side, you'll be eating up some of the view of it. I hope you find a way to keep it and love it!

i would replace the brick with sleek thin rectangular tiles.- glass would be great or a glass stone combo

I would cover the niches on the sides and do build outs of book shelves... and paint everything in s monochromatic fashion like all white or all beige and then paint the inside of the shelves and maybe even the wall above the firplace with a pop of color to add some drama... add a mirror or paintings above the fireplace... This would give you alot of storage space and would could be a real cool entertainment center...I attached two pictures that will hopefully inspire you

Bookshelves might stick out too much from the fireplace.

there is enough space to do bookcases and adds a finishing touch to the wall... and is more practical than covering it up and losing the potential.

If you want a kind of "blank slate" you can start by furring over the brick completely, drywalling, and leaving a mantel opening. (once you paint brick, it is quite impractical to change your mind) Then just find a nice arched style mantel and pop it on. You could even tile over the top of the brick 'shelf' if you'd like.

I would paint the brick all white and hang 2 square abstract art paintings over each arched niche and a large rectangular matching piece over the center niche

I like it just the way it is. It's unusual and one of the more interesting fireplace walls I've ever seen. I would paint the back a black or wall color and that's it. I'd buy a circular custom fire screen so the lovely curve of the fireplace can be seen. A TV in center as said and something interesting in niches (books, wine) as said or pottery OR even interesting mirrors