While it's convenient to have all your test equipment and parts right there on the bench, chances are you won't use most of it enough to have it that close to the work area when space is at a premium. I hang my small parts cabinets on the wall, and most of my test equipment other than my DMM, soldering iron, and variac are on shelves on the other side of the room.
I then have an old dining room table and some folding chairs with a gooseneck fluorescent light, which gives me plenty of room to maneuver the big chassis sets.....and the dollhouse my wife's working on
Things are a bit messier in the basement than usual.....I've been logging some pretty serious hours on the soldering iron lately.