I did the same thing in our kitchen. We had a small galley kitchen in our house, along with a decent sized seperate dining room. I knocked out the wall (Non load bearing) between the kitchen and the dining area and made it one room. Then took the trim off the kitchen doorway, put in 2 vertical studs (To keep the 16" on center layout) and drywalled the kitchen side. Put up a nice 32" wall cabinet to add to the kitchen storage. On the side that faced the living room, I added some recessed shadow boxes made out of 1x4" pine attached to the new studs and then drywalled around it. The wife loved having the recessed knick knack areas.
Was pretty easy to do, and I have only average carpentry knowledge/skills.
Bob