Here are some cheap, easy fixes to make a small space feel larger.
Let there be light:
Up-light your wall by placing low wattage lamps or halogen flood lights on the floor between your window curtains and walls. Light instantly creates the impression of a larger space. This trick works well in rooms with few to no windows because it still gives the effect of expanding the area behind the curtain.
Try stashing lights behind large pieces of furniture or open bookshelves. You'll draw focus to your favorite furniture and decorative items and your eye will pick up on the illusion of space behind the object.
Form and function:
Floor space is prized real-restate in a small dwelling. Wall shelves are a great solution to adding functional and movable storage anywhere. Place shelves over desks, sinks and stoves. For items lesser used make use of the valuable area along the ceiling perimeter, over windows and the far corners of your closets. Mounted low they can be used in lieu of nightstands and end tables. The floor space you'll save will visually open up your room.
As a rule of thirds:
When tackling a room or space start by diving it into thirds. Two-thirds of the room should be devoted to furniture to keep it from looking "overdone" or crowded. Nor do you want the opposite look - "underdressed" or sparse. Keep the room's identity in mind as well. While a full-length couch can be a decadent element in a pint-sized living room, a king size bed will probably dominate a square-footage starved bedroom.