A small room can be elegant. What little princess wouldn't love this cozy nook. You could use a secured wooden shelf (IKEA), some curtains, and a twin or toddler bed. The sconce doesn't have to be hard-wired. Don't have a little princess? This would be perfect in an office for a guest. A trundle bed would allow sleep space for 2.
The glass accents and fresh flowers give this nursery from <a href="http://www.houzz.com/photos/8830224/Baby-Kates-Nursery-dallas" target="_blank" rel="nofollow">Houzz</a> an air of subtle sophistication.