A small room can be elegant. What little princess wouldn't love this cozy nook. You could use a secured wooden shelf (IKEA), some curtains, and a twin or toddler bed. The sconce doesn't have to be hard-wired. Don't have a little princess? This would be perfect in an office for a guest. A trundle bed would allow sleep space for 2.
I like that each bunk area has some privacy and is painted a separate color (which obviously you could paint in any colors), but I might add a curtain to the sleeping area for more privacy. Interesting idea for a kids room where they have to share... seems a little odd though?
What an awesome idea in a little room! Stick a mattress in between and you've saved a whoooooole bunch of waste space. *put some pillows on that top shelf, and you've got a reading nook too! the possibilities are endless!!