If your small space is one room like many urban efficiency apartments, then sleeping is a problem. It’s really an age-old problem. Several practical solutions are to leave your bed in plain view and work with it or your or best to integrate it into the design and flow of your space. Another solution is a Murphy Bed — really the best solution if money is no object. A third and the most reasonable solution is a piece of double duty furniture like a futon. The problem with many futons are just god-awful.
There are some great looking alternatives to the usural suspects. One such option is the apt City Sofa Bed. Notice they carefully avoid the word "futon"? Its not a futon is a sofa bed. It is a great option billed as a 24-hour piece of furniture — one of the best-looking futon, err, sofa bed I have seen. Not exactly cheap at nearly $1,600, but the value of purchasing quality cannot be overstated.
Check out apt; they have a great selection of modern furniture.