My tendancy would be to take a cupboard and fill it with as much shelving as possible, which I would then fill with junk i don't need to keep - but this adorable kiddie closet, via
young house love - has made me rethink this philosophy.
I love the little reading nook - but i might be tempted to put in some of these little ikea spice rack shelves too
(image via farm6 flikr)
Or you could of course go all out and loose the clothes and just make a reading cupboard: