Well, naturally knocking down walls would be the ideal solution. Plus you'd be doing yourself more of a long term service as opposed to decorating here and there and eventually tiring of it & wanting to resolve the basic issue, which is enlarging a small house.

Small houses are cute, though, so be careful how you go about it. It's diffcult for me to give you solid advice without actually seeing the house itself but if you're taut with money right now and need to wait to knock them down, painting walls in soft color (warm, pastels like eggshell) and then a darker color on one of the walls can pull the eye to an optical illusions that the space is bigger than it is.

Paint solutions are brilliant. I wanted to give our bedroom the feeling of being secure, snug and cozy, much like a bear's cave and painted one wall in a taupe (gorgeous color by the way), going up the ceiling in the same color and down the other end. The rest of the walls are in soft eggshell color. It made the room snugger, no doubt if it, but what a lovely BR feeling.

If you want to discuss this more, perhaps adding a photo of a certain site would help. Not sure if you can do that here, but worth a try.