My closet isn't small, but it certainly isn't large. The shape is what is tricky. It's shaped like half a box. A rectangle with racks/shelves on three sides. The corners where the walls meet are utterly useless because the hangers run into each other there.
I have two other closets in the two spare rooms, but I only store outerwear there (first home I've ever lived in that didn't have a coat closet). If I store clothing in there, it doesn't get worn. I have to see it to wear it.
The same goes for my own closet. If I do those multi hangars and can't see the clothes well, I won't wear them. So it is critical for me to purge to the essentials otherwise I have a mess on my hands.
Believe it or not, my dear husband is helping me to through my entire wardrobe piece by piece. I will have photos to share here for advice on a few things, but he's helping me with the things I'm holding on to for purely emotional reasons.
Anyway. The closet has been a mess and I've been in a rut with what I've been wearing. Hmm, wonder if there's a connection?
We have a large master bedroom but only one medium size dresser. We plan to upgrade to a larger dresser soon, so that will help.
In my closet, I hang everything, but fold sweaters and graphic tees and jeans. Bryan does the same. I hang my bras from a hook that also holds my necklaces and belts (this needs to be fixed!).
I have found that little things - such as matching hangers and hanging hangers in the nooks above the rod not on the actual rod (thanks Angie!) - help tremendously. It keeps things looking neat and tidy. I also hang my clothes so that they all face the same direction.
I'm struggling with shoes (perhaps I have too many) and hat storage, but I want to tackle the clothes first. I tend to look at the big picture sometimes and get very overwhelmed with the task at hand. Baby steps are the way to go, and having Bryan keep me on track has been incredibly helpful.
We have noticed in this practice, that I tend to settle a LOT. I have several items that are very similar. IE: I really want a black sweater dress. I want it to be a cowl neck with at least elbow length sleeves, and I'd like it to hit right at or slightly above the knee. I have three black sweater dresses - each of them have some of the credentials, but certainly not all. Through this process I'm learning to be more picky and PATIENT with building a wardrobe. I liken it to losing weight...to do it right, you have to go slow and steady. You can't expect massive results overnight.
Anyway. That was long.

I was going to suggest clothing rails - but you indicated more furniture in your room is not an option? There are actually some aesthetically pleasing clothing rails out there - meant to be seen and all that. Let me see if I can dig up a link...

http://www.bambienti.com/products/clothesrail.htm