it seems that the quest I am on is replicated by the "apartment dwellers" out there. Thankfully they have paved the way and I found some stores that cater to the smaller home.
HomeReserve is one that has lots of couches and chairs and even sectionals that will fit in a small home. The completely designable sectional actually would work well in a small living room as it eliminates the need for chairs if designed right.
Crate Designs has some beds that are perfect for small homes as they have storage.
Apartment Decor is a cool site that sells apartment specific furniture and other items.