There are kitchen designs in which the
sink sets in the corner of the breakfast bar. The advantage
of a corner sink is all the storage that's available
inside the triangular base cabinets.
Once you've decided on the placement of the appliances and the sink, measure the kitchen from wall to wall and from ceiling to floor and take these dimensions to your cabinet supplier. The cabinet dealer will then make a detailed drawing of all the base and wall cabinets, but he will not order the cabinets until the kitchen is framed in and the dealer has measured it.
The cabinet drawing will also detail how long and how high the breakfast bar or peninsula wall will be. The peninsula wall needs to be at a 90-degree angle with the kitchen wall. To lay out a 90-degree angle, use the "3-4-5" rule. A 90-degree triangle with a base of 3 feet and a leg of 4 feet will have a hypotenuse of 5 feet.
Any multiple of the "3-4-5" rule will work. For instance, you could use 6-8-10. Mark where the peninsula wall will start and then measure back along the existing kitchen wall 4 feet and mark that spot.
Lay a yardstick where the peninsula wall will stand at an approximate 90-degree angle with the kitchen wall. Next, use a tape measure as the hypotenuse between the 4-foot mark and the end of a yardstick. Move the end of the yardstick sideways until it aligns with the 5-foot mark on the tape. The yardstick is now at a 90- degree angle from the kitchen wall. Mark the floor where the wall will go, and you're ready to start framing.
You asked when to quit. That depends on your skills and time. You are lucky to have a contractor who is willing to work with you to save money.
Since more than half of a construction project is labor, do all the dirty work, hauling and cleanup. Keep the worksite clean, make sure the workers have enough materials to keep them busy and do all the "gofer"-work (meaning to go for coffee, materials, food and odds and ends).
Do the follow-up work to make sure that all the nails and screws are set, finished walls sanded smooth, nail holes filled and painted surfaces covered and protected. If you can paint or hang wallpaper, do it yourself.