Here's one family's major down-sizing of their school room... check out this "before" and "after"...
Yep, they went from a ginormous school space to a single bookshelf! Talk about downsizing!!! Why on earth would they do this?
Because they didn't enjoy spending time in their "formal" classroom, and ended up doing their school activities at the kitchen table or snuggled up on the couch. So they relocated their supplies accordingly. You can read the original post here.
It is by no means necessary to recreate an artificial school setting. In fact, one of the biggest mistakes new home schoolers make is feeling the need to imitate the very school system they've chosen not to enroll their children in. (Read Home-school vs. School at Home) This seems to be a strong tendency for past-teachers, but is still a natural inclination to most (if not all) of us who've gone through the school system ourselves.
Many home schoolers have no official school room, but work in different areas of the house like the dining room table, living room couch, back yard, etc. This approach works very well for many families and even allows Mom to multi-task when needed without leaving the room.
So what about school rooms? Some families have a school room where the bulk of the school day takes place. Others have more of a library. Others have a space where they keep school materials, then take what they need out as they need it.
Personally, I like the idea of having a school room or school space. I don't mean a room that attempts to look like the traditional classroom with seasonal bulletin boards and poster boards with rules written on them. Instead, a school room or whatever dedicated space you choose may serve as an organized base of all home schooling supplies, materials, computer, etc, with open space to spread out any activities and projects.
Keep in mind that home schooling is about blending learning with life, so whatever school space you use shouldn't be too separate from your living space. Some families have converted extra bedrooms or offices or formal dining rooms, etc into a learning space. The ones that are centrally located seem to get more use then the ones set off separately. See examples of various families' school rooms here!
Whether you choose to have a dedicated school room or not, remember to enjoy the freedom to take work elsewhere too. Like working outside on a nice day, in bed or in front of a fireplace on a chilly day, or reading or watching educational dvds snuggled up on the couch.