The below photo will give you an idea as to how a small room might look. I can see myself using it on business travel with while using my iPad to watch a movie, read a book or just check my email.
Just so long as I don't have to take a high-speed train to get there! 
For those of us who are claustrophobic, this would be a nightmare!
There is nothing wrong with this concept, especially in a big city like Manhattan. When I travel for business, all I really need is a place to sleep and take a shower.
That may be OK for one or two nights.
But IMHO, the monthly rates get ridiculous.