Small does not mean dysfunctional!
Decorating a small bathroom does not mean you have to 'do without' those little touches which make a room attractive. There are a number of things you can do to ensure your bathroom is fully functional yet also has comfort and style.
A small bathroom needs to be carefully planned. For example, you may already have the bath/shower, toilet and wash basin already installed. So now you know exactly what space you have for other fitments, and probably which colors will go.
It's a good idea to take a look at many of the 'space saver' units you can buy such as corner baths, corner bath with shower, corner shower unit, etc. Using these units will then give you more space for other accessories such as cabinets and towel rails.
Tiles - functional and attractive
Decorating a small bathroom often involves using wall and/or floor tiles, and sometimes it's practical to use wall tiles on all the walls, or most of them. Changing the color of walls needlessly will make a small room look even more disjointed, so even if you don't have tiles on all the walls, don't have a sudden change of color.
There are no end of tiles to choose from, with all the colors you could wish for. They come in various sizes, and are available in prices to suit all budgets.
Floor tiles are often a really good idea in a small bathroom, because any splashing tends to go everywhere!
When planning your main items make sure you leave enough room for yourself! It's no good having all the facilities you want and then finding there's not much room for you to move around.
The importance of fitments
Take your time when selecting your fitments, especially in a small room.
Wherever you can, use space saving fitments. Make use of every conceivable space, every nook and cranny. Instead of a mirror, use a narrow cabinet with a mirror front. If your bathroom has a radiator, install one which incorporates towel rails. Is there extra room above the sanitary ware? Fix shelves.
You may find a single light source (perhaps in the center of the ceiling) will provide all the light you need. But this is not necessarily the most effective.
Even if the room is small, consider using lights around (or as part of) the mirror over the wash basin, and lights fitted into the ceiling over the bath/shower. Multiple light sources give any room more interest and character, as well as providing light exactly where it's needed.
You can use light colors to 'open up' the room, but if it's small anyway, no amount of light color will make it look that much bigger. Sometimes it's nice just to go mad and use color you wouldn't dare use anywhere else.
Decorating a small bathroom will be influenced mainly by your sanitary ware, it's color and texture. You can either go light with the decor, or have a complete contrast and select dark or bright colors for walls and tiles.
The Shortcut to Perfect Paint Colors - Paint Color Cheat Sheets
There's more information on this topic in the section on bathroom decorating ideas.