If you have space, another couch of a complimentary colour to your couch with its back facing the dining room (or an occasional chair there on an angle) would be good. A large rug to tie together the seating and a coloured wall where the existing couch is (be it paint or wall paper or a large artwork) would help make it cosy.

Take out sofa, use beanbags and those blow up seats for their friends. Coloured rugs for tumbling and crawling on. Supersoft teddy bear blankets so they can curl up. Add in one of those soft blanket boxes for toy storage and so you have somewhere soft to perch when you are with them. Paper half way up the wall in the wall paper that kids can draw on, so they can decorate in whatever colour they like and you won't mind. A childs lift up desk, bookcase and some crazy lamps in weird colours. Then close the door, collapse on the sofa that you have moved, breathe a sigh of relief and thank your lucky stars that you have another room for the kids to go to. (Grab wine and pretend they aren't yours for half an hour! ;-) )

If it all fits in then why not. I don't think the desk will go with the bed or maybe it would work it the desk was painted. Do you need the desk or could you use a smaller console table for working/doing things from ? Not a fan of sliding doors would rather swop the door so it opens the other way if space is an issue. What is going on the shelves are they needed ?

Thank you both for taking the time to comment. Yes it would be better without the doors but unfortunately the doors have to stay. Patricia's U-shaped idea is promising. I could use the outer two thirds of the 'conservatory' area as a 'lounge' space and then place a dining table extending up into the rest of the kitchen area. I'm just unsure as to whether it will work as a unified space.