From Coral Nafie,
Your Guide to Interior Decorating.
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You can "push the walls back" if you select the correct wall finishes.

Choose Light Wallpaper

Wallpaper with a white or light background gives the illusion of a more open space. Choose an open, airy design with white, yellow, or neutral ground.

Add Depth to the Walls

If you have an artistic flair or a friend who does, you should consider painting or stenciling a decorative mural on the largest open wall. Or hang a framed picture that looks like a window, looking out onto a garden or beautiful horizon. These can help to expand the look of your space. Any piece of art that shows an outdoor vista will help to enlarge the feeling of the room.

Expand the Ceiling

You can create the illusion of a raised celing if you paint a lattice or molding design around the edge of the ceiling. Install crown molding around the ceiling and paint it the same color as the ceiling. Or faux paint clouds or stars, using a light color and white.

Eliminate All Clutter

A clean, neat bathroom always looks larger and more spacious than a cluttered, dirty one! Have only essential must-have's visible and put away everything else. Spend some time organize storage areas in a linen closet or vanity to make the most of what you have.

Just because your bathroom is small doesn't mean that it has to be dull. It can be a warm and inviting retreat, showing off your sense of color and style.

Next: Weekend Projects for Baths