We have renovated four kitchens, three of which looked a lot more dated than what you have so this too is my bread and butter.

My two cents:
Tile: Lay the tile on a diagonal. The cabinets have strong vertical lines and it might drive you crazy if grout lines on the floor and the cabinet lines don't line up. Or do line up. Skip the dilemma by laying on the diagonal. It's a little more difficult to install (but still a diy job) and there's a little more waste in the cutting but it's very much worth it.
Also, consider a colored grout which will tie in with one of the other colors you're using in the kitchen. We once did a room with limestone sandy colored tiles and a dusty teal grout and it was very understated but somehow added a certain panache that white or off-white grout never could have. There are some beautiful grouts out there. Don't forget to seal afterward!
Backsplash: Tear off the wood. You have enough wood in that kitchen. Either tile your backsplash or leave it plain (drywall).
Cabinets: Wash with Soilex or TSP first; seal with Kilz or BIN. Whatever you do, don't skip these steps. Next, go to the library and check out a pile of books on decorative painting. Debbie Travis
http://www.debbietravis.com/ has a few that are really good. Check out
www.hgtv.com as well for ideas. If you're going through the trouble of painting, it's not that much more effort to apply a glaze or do some distressing or faux painting. It's not hard at all and no particular artistic talent is required, especially if you follow step-to-step directions from a book or website.
- update hardware, as everyone else has mentioned. It makes an enormous difference. And don't faint when the bill is tallied up. Sure the pulls and knobs are only a couple of dollars a piece, but you need so many of them! More than you might think. (But it's so worth it.)
Lighting: the flourescent is dated. There are better options out there that don't cost as much as you might think. Check Lowe's and Home Depot.
Sink: lots of options out there, and treat yourself to a new faucet while you're at it. Lots of bang for the buck. Take a look at the pullouts.
Walls: strip the wallpaper first!!! It's a nasty job, stripping wallpaper but you'll never be happy with the way it turns out if you don't do this before you paint.