Built-ins are definitely the way to go! Our house in Toledo was barely 1000 sq. ft., but we had all kinds of built-in dresser drawers, cupboards, etc. The bedrooms were small, but there was plenty of room because of the built-in drawers. I only had one regular dresser and it was antique and in the hall mostly for decoration. Our house we have now is over twice as large but acutally seems smaller. We have only two closets in the whole house and had to get lots more dressers, chests, etc. to keep clothes, sheets, towels, and other linens in. After living with minimal furniture for so long, this house seems kind of cluttered-up with furniture. In the future, we want to build a small house and we will definitely include built-in furniture--dressers, cupboards, window seats that double as chests, a built-in booth for eating, etc.
Did you follow some of the links and see the pocket neighborhood cottages built near Seattle? The cottages were adorable, but the prices! $200,000-$300,000+!!! And they still had to pay a fee because they were run like condominiums! But, the cottages were so cute and I got a lot of good ideas.