One of the most interesting concepts for the space starved modeller is the "Inglenook" concept. This is essentially a puzzle, where you have a couple of sidings, a set number of wagons, and one locomotive, and the idea is to shunt the wagons from the starting order, to a pre-determined final order, usually by putting coloured stickers on teh wagons and shuffling a pack of couloured cards. Layout size can be as small as 1' x 4', so you could have a loco depot as a separate section to display the engine as well as having fun on the otehr bit
Go to
http://www.wymann.info/ShuntingPuzzles/sw-inglenook.html for a good description of this sort of thing. also try RMweb, where modellers have come up with very small layouts - whould you believe a boxfile layout?