My first craft room was in a closet also! I had to have something because the house was getting unkept with ribbon cuts all over and other stuff. I wish I had a picture but basically I had a table inside and a shelf up top. If you go to flickr and search for craft rooms you can get some ideas on how to organize your space.
I think now that I have a big one I just end up buying more stuff to fill it up with
-Andre'a