I live in a small studio and have done for about 9 years. Primarily because the rent is cheap & stabilized (I pay less than $1000/month which is nuts for Manhattan) but also because I've really come to love living in a small, compact space.
 
a) Everything is within reach. I don't have to hike up and down stairs to get things, or indeed from room to room (unless it's something in the bathroom)
b) It's so easy to keep clean and tidy. Takes me about an hour and a half to do a thorough clean and tidy (dusting, sweeping, floor cleaning, all surfaces, bathroom, put everything away etc. 
c) Because of the limited storage space I have to really think about what I need and what I don't need. There's no hoarding of crap when you live in a small apartment. Every year I find myself giving away or selling so much stuff that's outlived its usefulness, or that's been superseded by some bright shiny new version. I really love filling bags of things I don't need any more, then gazing upon clean and organized shelves and cupboards. 
 
Girlfriend wise it's not ideal but then again my girlfriend doesn't live with me - if she did it would probably feel a lot more cramped. As it is she's over here most evenings and we have a great time without it getting too claustrophobic. 
 
There are disadvantages to where I live, for sure. I have to think about the noise I'm making which means no midnight mixing sessions. And although it's the trendy East Village, technically it's a block away from the projects which means there's often hairy stuff going down, like the guy who got shot in the stomach around the corner a few weeks ago and ran into the deli downstairs gushing blood like a scene out of Goodfellas. But other than that I'm super-duper happy living in a cubicle. 

That's pretty cheap for Manhattan. So your on the lower east side? I haven't been down there yet. We've been talking about going back to NYC sometime and I would like to check some of that out. I want to go to 'The Bitter End' and catch a show.

It's almost like living in the UK without the craze no?
 
My wife & I also love watching HGTV, what we can't figure out is how the prices on homes in various countries are almost identical to the prices here in the US (even the (economically) poorest of countries).

clintmartin
That's pretty cheap for Manhatton. So your on the lower east side? I haven't been down there yet. We've been talking about going back to NYC sometime and I would like to check some of that out. I want to go to 'The Bitter End' and catch a show.

Not sure if it's the Lower East Side technically, I always considered that to be south of Houston St while I'm on the north side. It's Alphabet City, part of the East Village. This was once a very dicey neighborhood, if you look at photos of it in the 70's and 80's it looked kind of like the Bronx - lots of derelict and half collapsed buildings, a bit like Beirut. Lots of landlords torching their buildings for the insurance money, crack dealers on every corner, that sort of thing. It's gentrifying now and there are lots of cool eateries and cafes as well as fancy condos going up, even on Avenue D! But you still hear the occasional gunfire coming from the projects.
 
I remember when I first moved here, it was a lot more ghettoey than previous NYC neighborhoods I'd lived in (Upper West Side, Midtown etc) and I was a little nervous (probably also to do with the primo weed I was smoking back then). The first week I was here I was leaning out of my window on the phone to someone and heard a huge sickening bang. Looked to my right and a whole apartment on the 20th floor of a block just across Houston St was exploding in a Die Hard style fireball. Turns out some guy pulled a murder suicide on his family. Didn't exactly do anything to soothe my reservations about moving downtown 

You still couldn't pay me to live in an area like that!