I used to get questions a lot when I was decorating on how high to hang curtains. My opinion always was:
Here are some opinions from other sources:
Southern living - "Hang your drapes high. To create the illusion of a larger room, hang your drapery rod just below the ceiling rather than right above the window frame. A higher rod draws the eye up and allows more light to come in. If the ready-made curtains you love aren’t long enough, add a simple band of fabric in your accent color for a custom look that costs a lot less."
From
Canadian House and Home's How to Hang Curtains - "For standard drapes that hang on either side of a window creating a frame, the typical height at which to install the drapery rod is halfway between the top of the window and the ceiling. This applies if there are more than 12 inches between the window trim and ceiling. For a cathedral ceiling, try to leave approximately 4 to 6 inches above the window trim as a guideline. If your ceiling is low, consider installing the rod as close to the ceiling or crown moulding as possible. In a small room, hanging drapery panels as high as possible will give the illusion of extra height."
I think it also works well, and feels more cohesive, to hang all of the curtains at the same height, even if the windows are not...
Many times hanging the treatments higher is not that much of a stretch because the window is fairly close to the ceiling.
myhomeideasBut other times there is a space between the top of the window and the rod. Almost every time I would suggest curtains be hung higher than the window (without a top treatment) when the ceiling wasn't in close proximity, I would get the question "but what about that space?"

I think it's fine to leave the "empty space", but in case it bothers you, here are some ideas.
A cornice board is an option everyone is probably familiar with...
I don't know if the shades in the next two images (from
Amanda Nisbet and
Phoebe Howard) are functional or not, they probably are, but it's a good visual on how it would look to make a faux roman shade to fill the gap. Sunset shows you how to make them
here.

We've already seen this image from
bhg.com in
this post. In it, they've used a mirror to fill in the space. I admire the idea although the fact it reflects the chandelier makes it feel a little busy for me.
GCI Design used artwork...

Kimba at
ASPTL wasn't talking about curtains in
this post, but she did talk about what she puts above her doors and windows. Any of these ideas would work!
I saw on a TV show some time ago (I think it might have been Colour Confidential/Get Color, but I looked for it on their site and couldn't find it - which is how I ran across the other images!) They hung the window treatments at ceiling height and then painted the space between the top of the window and the rod in a darker shade of the wall color. It looked great! Wish I had a visual for you, but if one of you try it I hope you'll send me a photo.
What's your opinion on curtain height? Also, are you a space filler or fine without? Any creative ideas that you've used above your windows? Have I asked enough questions yet? :-)