Japanese architects have also long struggled with redesigning living space, and they're also coming up with new, innovative designs. I'd live in several of these:
http://www.npr.org/templates/story/story.php?storyId=128953596This has a lot of practical application in the United States, but the big hangup is convincing Americans to drop their "larger-than-life" attitude. Many Americans choose enormous homes simply because they
can, and because it gives them the feeling of "larger-than-life" that Hollywood teaches us to value.