As mentioned in my very first (and one and only up until now) post, we had an small and awkward space in a hallway under the stairs. The space connects the living room to the office and given the size of our house, is very visible. Aside from crafting at the dining table or up in their own rooms, we were finding the kids needed a place to keep their 1001 markers, crayons, coloring books, etc + have a place to display their creative masterpieces. So as you do in a small home, you look to maximize space and storage in any way possible.
I am betting that in another few years we will need to re-assign the use of this space, but for now we have turned it into a pretty nifty craft station (which the kids love to use as another one of their dumping grounds....sigh). Just keep thinking, clean as you go.