Regarding colours you can probably go as high as 64 colours, before the system heavily slows down because you don't have a graphics card, obviously.
You will need a modern icon set, maybe alternative icon.library from Aminet.
For the background you should make up your mind finally for resolution and colours, and then scale (down) your wallpaper to that resolution and save it as an IFF. Do not attempt to just choose a jpeg for your background, the delay it takes the Workbench to scale it down will drive you nuts.
Use PPaint for instance instead.
Of course, with an o30 turbocard you should think about getting Kick3.1.4 and assorted disks, but there are monetary units involved going this way.
Edit: 1221EC is an o20 i guess?
This is quite an extensive topic, there are things like FBlit, ChipRAM usage and so on. A quick answer is therefore impossible.
If you are willing to throw money, imagination is the limit.
