Many people always seem to be trying to hide their kids' toys - in the basement, in kids' rooms, in dedicated playrooms. Unfortunately that doesn't really work well in real life, at least in my family's real life. The toys always migrate to where the adults are because the kids want to be with the adults. So, you have to make the toys work in your space and not worry about the gaudy plastic because that is generally part of most of our lives. I've learned to live with it. I think the secret is to keep them corralled in corners of the room. Kids seem to like corners of rooms - probably because they are cozy and somewhat confined yet part of the action as well.
In our family room, I created a toy corner mainly for my 16 month old, but which kids of all ages seem to gravitate towards. (Why do 4.5 year-olds still love playing with baby toys?) Here is how it looked last night which is pretty typical for this part of the house.
I try to keep the toys organized so that all of the vehicle toys are in one basket and everything else is in the other. This makes clean-up easier surprisingly. I also try to rotate the toys between his room, the basement, and the car but he definitely has his favorites which never leave the family room. Although the majority of his books are on his huge built-in bookshelves in his room, the small book basket keeps a few books handy - particularly lift-the-flap books which are his current favorite.
Another great thing about the open basket option is that clean-up is a breeze. I timed my clean-up tonight to see how long it takes to put everything back in relatively neat form - including putting toys back together with all or most of their pieces. 7 minutes exactly. Seriously.