So...I have a reeaally small bathroom and way too much toiletry's ( majority of which I do not use) and figured I am not the only one suffering with this problem. Here are some pointers to resolve your issue:
-your color palette should be pale,soft colors which tend to give the illusion of more space.
-brighten up your room...again, since space is limited, you can add some recessed lighting.
-get rid of your large vanity and replace it with a pedestal sink...you will have space underneath, letting your room to breathe and you can add some dainty wicker baskets underneath for extra storage
-need more storage space? Add some acrylic shelves... not only will it look like nothing is on your wall, but it will help you store items without using up any space.