Well i'm confused about how that is small? Sounds like you just need to declutter and then you will have heaps of space - start small, pick one room and start there. Stop using a bedroom as storage - rent a storage space if you have to.
I live a small house, 3 bedrooms (only 2 useable) with 2 kids and 1 on the way, 1 living space (small), no dining room but we make it work. The key is no unnecessary crud and being organised and clever storage.