The "Write" Setup
In order to produce creatively the setup is the key. If you have the ideas without the setup then you only have the ideas. I have worked like this before, it's frustrating. In order to maximize on your space it you should focus on five important aspects;
1. Privacy - Whether you work better in public or private the best way to maximize your creative output is to reduce distractions. Probably not a good idea to have that Playstation 3 in your office where you work. Also family, they need to know when it is your time to write. It can be as simple as a closed door or as complex as a monthly time schedule on your fridge. At any rate they need to know what times to leave you alone.
2. Research - Your references should be right at your finger tips. Dictionaries, The Elements of Style, hell even old copies of writers digest. I have turned a large portion of my office into a working library. That way if I have anything from pharmacological texts to the Encyclopedia Britannica right behind me. The internet does wonders for the consolidation of information but just remember if that connection goes down you will be screwed.
3. Comfort - The majority of your time will probably be spent hunched over hunting and pecking away at a keyboard. Your chair should be comfortable. Your monitor should relieve eye strain. Your keyboard shouldn't cause any discomfort to your wrist. But most of these factors vary from person to person so a lot of this one is down to personal choice.
4. Organization - Every office is messy. I am not talking about overall cleanliness. Hear I am referring to your writing. There are times when I have had up to thirty documents open spread out over two computers. You must have a good filing system in order to keep track of current projects. You don't want to end up editing the same manuscript four or five times because you forgot what folder you saved it to.
5. You - This is the most important aspect of your writing space; you. It must be tailored to your needs and wants. Everybody is different so go crazy. If you work best at a desk behind your living room couch while your family is home then go for it. If you work best in solitude try that. Decorate and then redecorate. If you start to suffer from writers block move your desk to another wall. Get attached to your office, its an essential part of you as a writer.