Full rooms -- even full floors -- can be transformed into useful spaces with a little effort. One of the most popular home "additions" is transforming a dark basement into a series of useful rooms.
Almost any under-eaves space can often be made servicable, at least for seasonal storage. And enclosed porches can often be made weatherproof, then enjoyed year-round. Big changes to these found spaces often involve systems work -- plumbing, wire, and heating -- but the cost is usually well below the cost of moving or adding new space to a home.
Not all underused space in a small house is as big as a room. Any niche sitting idle has the potential to serve a better purpose. A corner of the kitchen may be all that's needed for a message-and-bill organizing center, or a bedroom dormer may be the perfect reading cubby you've been seeking.
Source: BHG.com - Better Homes and Gardens online