This small 840 square foot cottage in San Francisco is such a great example of what one can do in a small space. The cottage was designed by Boor Bridges Architecture, whose goal is to "artfully manipulate the relationship between people and their circumstance."
My favorite details in this remodel are definitely the outdoor concrete soaking tub and central fireplace which was finished with re-claimed douglas fir.
P.S. - These are the same architects who designed Flora Grubb Gardens in San Francisco; it is at the top of my list of places to visit this year.