Just because you have a small bathroom does not mean that it can't be renovated into a light airy space that will feel luxurious. Depending on your budget there are many ways to make your small bathroom into the bathroom of your dreams.
Paint is the cheapest and most effective way to make a dramatic change to any space. You should stay away from darker colors and instead choose a light color or white for a small room. Choosing these colors will make the room appear larger and more open. You can still use bright, bold, and darker colors for accent pieces or for the bathroom linens during your renovation. In a small space too much clutter can make one feel claustrophobic, so clear it out. You'll be amazed at what it will do for your space.
Updating your mirror and light fixtures can go a long way. Often the bathroom counter is so small that upgrading it to a more modern and upscale material such as corian, granite, or tile is both affordable and easy to do. If your budget allows for new fixtures then wall mounted sinks and cabinets allow for great storage options and free up floor space. A shower stall rather than a full bath will give a lot more room in a small bathroom.
Larger tiles on the floor and in shower stalls can give the appearance of more space. Thin grout lines in a light color help complete the look. A lighter color on the floor will make the room seem bigger.
Finally you will be able to accessorize your bathroom in your new color scheme. Simple wall hangings such as family pictures and framed artwork can adorn the walls in whatever colors you have chosen. New towels, bath rugs, and shower curtains can tie everything together. Other accessories such as toothbrush holders, towel racks, and soap dishes can complete the look. Using curtains or blinds that let in a lot of natural light can help the room feel airy and open while maintaining privacy. A nice smelling candle in an accent color can be useful for those relaxing baths and adds a nice touch to the room.
Renovations for small bathrooms can be fairly easy and little touches go a long way. Many renovations can be done by the homeowner and can cost very little. More extensive renovations should be done by a remodeling contractor and should be fairly inexpensive for a small space. Enjoy your new space!