I lived in some pretty small places in Tokyo (e.g., roku-jo/12 m2) before I was married and loved it - everything was fitted in, including a toilet/shower/bath little bigger than my current toilet.
We just extended our house as part of a green reno, and the most common comment we've had from friends who've seen it is that the extension (about 40 m2) is ... small. Australians are now firmly of the bigger is better mentality, even people who really should know better: typically a house like ours renovated for sale will have a huge (and I do mean huge) weatherboard and plaster box added to the back of it, with halogen downlights, polished floorboards, french doors, outside decks and cheap appliances: they look great at first but are impossible to heat or cool and typically take up the entire backyard. We live close to the city and have a rare large block and I wanted to maintain as much of the backyard as possible, hence the small extension. By adding a new, small kitchen and living room and re-jigging the rooms in the original house we went from 2 bedrooms and a study to 4 bedrooms, a library and a study and still have a 30m deep back yard - room to kick a footy.
The new extension is solar passive and I highly recommend that approach. We now use half the electricity, have reduced gas use by 95% and recorded zero water use on our last water bill (we plumbed rain water tanks right through the house, so evidently the small amounts of mains water we use for drinking etc aren't big enough to register).