This is an interesting use of functional design, space and multi-purpose furniture.

"In 1996, Barcelona architects Eva Prats and Ricardo Flores were hired to convert an old community laundry into a penthouse. At just 27 square meters (290 square feet), the space was minimal; it was also just a temporary home and the clients wanted a home that was maintenance-free."

http://www.floresprats.com/archive/casa_en_una_maleta/

Although, perhaps not very practical or visually pleasing - feels like someone has just moved in with lots of cardboard boxes. But I imagine it would be really easy to clean and you'd be less likely to collect clutter - otherwise you'd literally not be able to get into bed!

http://www.core77.com/blog/architecture/an_unusual_take_on_the_transforming_micro-apartment_forget_the_walls_do_the_center_24158.asp

I think though you might be inclined to add things to the walls - extra folding tables down or seating. There isn't actually a lot of places to sit - especially as there is a double bed, but I only saw one chair?

I do like the use of the step as another bed/sofa and the kitchen area is quite nice to fold away. Again though, I think it might have been better with a different finish around that area for food preparation.

There are lots of other designs in small spaces:

Small House Movement: (US) Small houses on trailers!
http://youtu.be/IRF1XNieeJA