Congratulations on moving out of the basement! Can't wait to make the same move, myself! As far as wall colors maybe something light, on the pastel side? On the HGTV.COM site they do have suggestions for different settings.
Maybe regarding the type flooring perhaps laminate flooring if it doesn't work in contrary to the style of the house with a few area rugs in key locations ie. at the cutting table,etc.
As far as lighting, maybe track lighting to spot specific areas, if you don't have the flexibilty to install pot lights along the perimeter of the room, most definitely you need ample lighting around your cutting table and your design wall, something that will not cast shadows on your work.
Perhaps while planning your renovation you could consider installing fixtures that fit CFL's or perhaps using carpet remnants as area rugs. Just thinking Green here.
Congratulations again.
Lissette