I actually have this exact same layout. In the smaller room, I have the walls lined with shelves for my fabric (and yarn) stash) and I have a cutting table in the middle of the room. Right now the ironing board is in front of the window but I think it is going to have to go back into the other room. In the larger room, I have an old plank dining room table as my workspace, plus my sewing machine (in a cabinet) and a few other shelves for misc. supplies. It is a great set up for me.