Months ago we converted our dining room into a playroom. We never used the space as a dining room and well besides the fact that you can see the room (aka mess) when you walk in the front door... I love having the kids playing soo close. It allows us to keep a closer eye on them! Curtains will be the next purchase (so I can have some division between the front living room and the "play room".
This is the storage system I have my eye on is called the trofast system.
I have been looking at this one: