Semi Finished Basement?

Our readers are such a wonderful source of frugal, practical creativity, so here is something to think on:

We have a large basement which we use for storage, it also has the boiler, etc, and some shelving.  The floor is painted concrete, the walls are exposed cinder block, it is fairly dry unless our neighborhood floods, the lighting is kind of depressing.  As mentioned in the previous post, we bring bins of toys down there, which has made it an attractive place to my children.  They are also allowed to bring scooters and bikes down there in the winter. I also have my sewing machine down there and a gift wrapping area.

I would love to have them spend more time there, and to make is slightly more safe/attractive so that they can bring friends down, without actually finishing it.  I think we will hold off on really finishing it until it is a teen hangout space.  What I want for now is something like this:

What suggestions do you have for making it fun and safe for kids ages 5 and under?  I might bring our plastic playground equipment from the back yard down there for the winter so they can climb and slide, but then I need to put something on the floor.  I also want to test if the ceilings would be high enough to set up our bounce castle down there.

We went to this awesome open playspace in upstate new york, and my real dream is to have it be like that, but on a tight budget.