Have you ever checked out ApartmentTherapy.com? You should. Cool stuff, and a lot of it is geared toward the very people we help--people with smallish apartments that require a lot of feng shui to fit all their stuff and still maintain some peace-of-mind.
This is exactly what I'm talking about: "More bang for your buck: Double-duty furniture ideas." I recognize this bookcase -- it's our old nemesis the grandaddy Ikea Expdit. We've seen a lot of these used in just this way. They break up rooms to create separate sleeping areas, or sometimes just to create a private space for reading, an office, whatever.
Now, I'm NOT recommending that you get one of these, particularly if you live at the top of a three-floor walk-up (or higher!), but they ARE pretty handy. Just sayin'.
Anyway, check it out. It could be helpful.
Question: What kind of solutions have YOU come up with to deal with small or crowded living spaces in the city?