When space is limited, workspaces must be as functional as possible. Although it seems contrary to the principles of organization, it may make sense not to keep your files together in one place in order to maximize functionality.
My workspace does double duty as my home office and my crafting area. It is also in the living room, so I like it to be presentable (at least most of the time). I have a nice looking, large two-drawer filing cabinet that also provides a home at working height for my paper storage and storage for the tools I use regularly when I do crafts. But when I needed some extra space to store some larger crafting tools, I looked sideways at the filing cabinet and wondered how much space I could clear.
I was amazed when I could comfortably empty an entire drawer with the files that rarely get accessed. Most of these were tax or work related records that I need to access only about once a year. The space is much better served by moving these files to boxes under the bed and giving some awkward larger tools a convenient home out of site.
Please comment with your ideas for keeping your workspace organized when you are short on space!