I am somewhat with digme above...
Think about how you would like to use your outdoor space to eat out there or to sit and read or what.
You could do the deck/patio kind of idea, or you could save a little bit of lawn to put your chair and table or bench or whatever on. The deck/patio would be more $$/work initially but less maintenance after that.
But think about your little seating space as being kind of tucked into a plant grotto. Use lots of trellises to give you some vertical growing space. Hang baskets for color and greenery up at eye level. Hang bird feeders including humming bird feeders. You could put an arbor over the whole seating area for shade and hanging things from as well as grow vines up and over. (probably then you are doing the deck/patio/gravel kind of idea under the arbor as you will be making it too shady for lawn).
It could be gorgeous!
except for the big trees in the background, this is probably not much more space than you are talking about!