How would you handle this corner? (hardscaping)

[Dave88LX]

I'm not sure if I should do the retaining wall stone (this stuff: http://q-creteonline.com/1_20Retaining_20Wall_jpg.jpg, perhaps something a little fancier) level, and step down as I get down the slope, or try and do it approx parallel to the slope of the driveway and the walkway. Also to take into account ~1 foot back from the driveway is going to be a 4' picket fence, up against the house, going across the walkway, and headed towards the street. There is going to be a gate in the walkway, so that needs to be taken into consideration too. I think it will look bad if I just leave it driveway and concrete edging as-is. Plus all the dirt washes out of there into the driveway.

Ideas? Thanks so much.