The best location of living room is to be directly linked to the front entrance without obstruction. It should also be well lighted. However, after the house is built, there is not much change one can make regard the location of the living room. Therefore the decoration becomes most important. The living room is a public area in a private home. It exhibits the character of the hosts family to their guess constantly. In most living rooms, there are sofa/chairs, tea/coffee table, light, TV and some paintings/pictures plants/flowers or fire places. 

 The sofa and chairs should be placed when you sit, you are able to see all the door to the living room without great effort. If there is a door behind a seat, the door should be concealed. You do not want to be scared when some one approaches you from the back, neither does your guest. 
The best shape for a tea/coffee table is round, oval or octagon. The classic rectangular is also good if you make sure the corners are rounded. Definitely avoid sharp angled tea/coffee table, you don't want anyone to be hurt, in the FengShui way or physical way.
The light is more the merrier for living room. Use candle as lighting is also very good. The only thing to avoid is the sharp pointing candle sticks. Make sure they are pointing upwards instead of any person.
The TV and fire place should be placed that everyone can see it but no one is directly facing it. You are not here to watch a movie but to socialize. Slightly offset the angle or place some thing in between. Put something such as plants or flowers next to the TV or fire place and slightly closer to the chairs/sofa. 
Most people select good paintings and pictures for their living room. The reminder is definitely no sad paintings in the living room and portraits of one single person (or pet) should be placed in groups.