We also own an apartment (co-op) in Brooklyn. Even though it is a one-bedroom, we plan to stay here for a while and have adjusted with DD accordingly. The apartment has a room that is supposed to function as a dining room - but it is DD's playroom and will eventually be her room. I love living in this apartment, and like a previous poster said, it is quite the norm in places like New York City. Co-ops are big on the east coast and on the west coast - but I think it is unusual in the middle states (I could be wrong). Since we are owners, we can do any non-structural changes we want with the apartment. At the time/place/era in which I grew up - people outside of major urban areas didn't live in apartments. Times have changed, however, and more and more people are buying or renting apartments/condos for the convenience and proximatey to services. Houses can be a lot of work...and can literally eat up all your time and money!
Even as a previous renters, however, we had good experiences with landlords and each landlord was very flexible with what we did in the way of decor/painting. I think most landlords would welcome improvements or changes - just so you return the apartment to the original condition (i.e. white walls, etc.) when you leave.