I blogged before about How to build a very small house.
The nytimes.com has more on the phenomena here in this article: The Next Little Thing?
There is a simplicity associated with small houses that makes them appealing. Cost is another thing. Some of them have a nomadic aspect to them that makes them desirable, while avoiding the association with trailer homes (perhaps due to the design of them).
While they are small, they are no smaller than many one room apartments or condos that people often settle into as they get older. Yet unlike those urban dwellings, these small spaces can sit in locations with great vistas. (At least in theory.)
I think as more people buy and use these homes, we’ll see just how practical they are and how much people really like them. It should be a facinating experience. Perhaps in the future we will all become nomads.
(The highly evocative photo is by Stephanie Diani for The New York Times and accompanies the article).
Smart People I Know 
I have been working for corporate america for over thirty years so I can have all this stuff that requires me to continue working to sustain it. I am very positive about living with less and having time to explore the wonderous world we live in.