My second rule for decorating (right after feng shui) is USE SHELVES!  (And I'm not really shouting at you, I'm just excited about decorating with shelves and wanted to emphasize things a little!)

Using shelves is especially the case when it comes to decorating in a small or downsized space.  Shelving when done right will add to a room.  Not only does it supply you with an excellent amount of storage, but it also allows you space to place your favorite decorative items and plants.

You can even use shelves as decorative accents by placing them around windows, doors, and yes, even wall beds.