It’s actually both. At least in a teeny NYC apartment it is. Here’s how you make it work:

1. Find a small desk (2’x4′ is drastically smaller than anything 5′ long. And it helps not overwhelm. I love this CB2 one.
2. Light colors furniture makes it feel bigger
3. Not everything needs to be wood! Get some metal in there. Scared? Make it clean white.
4. Mirrors make everything feel bigger! And clear glass is clean and spacious. (Urban Outfitters has a relatively fair priced living section where you can find one)
5. A beautiful day bed also serves as a sofa, takes up less space, and no longer has to be a weird trundle. (Though yeah, those are pretty great, too). I’m loving this West Elm bed in walnut.
6. And a beautiful Turkish fabric pillow? That makes everything better. (ala Etsy)