We have a 2-bed place, but DH and all his junk is in the 2nd bedroom so it is like a 1 bed in a way. Co-sleeping is great so long as you know that noises in sleep are normal, don't "rescue" until the baby wants to be rescued (ie crying/about to cry). If you dislike co-sleeping, when you go to bed move the crib into the sitting room and hide it away again in the morning; you will need to get something like a moses basket for this though.

The sitting room has all DS's stuff in - we have a corner with a nappy box in and the nappies going there, the clothes in a box next to it. TBH, the clothes are usually in the washbin or in the airer so that solves that problem! Outgrown stuff is washed and folded then put in a zip bag at the bottom of the wardrobe, oversize stuff washed and folded away ready for use.