Wired has a lovely slideshow of tiny, perfect houses. Since I left Toronto in 1999 (where I had an illegal, 2,000 sqft warehouse space), I've lived in progressively smaller apartments and flats, and I've come to love it. I think the key is to be absolutely ruthless about getting rid of stuff that you don't need anymore -- for example, I've started to give most of my books to thrift-stores when I'm done with them, buying them as a used book on Amazon for a few pennies if I need them again.
Alas, most of these designer shoeboxes are premium items, super-expensive. But today's expensive bespoke prototypes are tomorrow's el-cheapo homebrew projects.
When prefabricated houses become small enough, high-tech enough and weird enough to allow for mounting on a cliffside or over a lake, they may have gone a step (or a splash) too far. The Single Hauz, from Poland, offers cantilevered space for one atop a cement pole, and looks like a cross between a billboard and a scene from the Myst series.