The challenge in any small space is how to get a lot of seating. No matter how large your sofa is, more than likely only two people will sit on it at any given time.
There are number of companies that do make very attractive small scale chairs for loft/apartment living and smaller spaces. I recently found this line of furniture and it's fantastic. The line features pieces with simple, clean lines with a little bit of funkiness thrown in.
For a small living room, I especially love these small scale armless chairs by Precedent Furniture. The depth is only 32" and without arms, you can tuck them into a small area. All of their chairs are very unique and modern, as are their sectionals. I am so glad I found this line!