If a hotel is upfront about not giving you much floor space for your money and puts some thought and design into the room layout, I've no problems with a 20m2 hotel room.

The example I have in mind is the Hoxton Hotel which has customised furniture designed to make the most out of a small room. Even the lines in the carpet are there to give an illusion of space. Interview here
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The question here is which high priced hotels give tiny standard rooms of 20m2 or less and charge you a fortune for them?

We had one example here recently, and that was Durrant's:
http://www.flyertalk.com/forum/showthread.php?t=703613&

Another one is the newly refurbished Intercontinental Park Lane in which huge, solid furniture designed for country Estates has been jammed into 20m2 rooms. Rooms here go for £300.

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In contrast I've stayed in a standard room of at least 35m2 at Thistle Marble Arch using Priceline, and in a much larger room with a magnificent panoramic view of London just near Tottenham Court Road at Travelodge Covent Garden (£29 a night rate). And there's an inexpensive Novotel just across the Thames from Westminster with 40m2 rooms.

There are plenty of modestly priced hotels outside of the luxury market which offer rooms of a decent size to their customers, how do luxury hotels keep a straight face when they charge vast amounts for rabbit hutches and tell you that the room size is 'normal' for Europe? Is it really that common?