I'd go with Tokyo, having been there a few times. That being said, I think it's a great place to live but not to work and there's places there with rent cheaper than here so that's not really a stretch.
I wouldn't at all mind living in a small space like that, as long as I had a place to sit and work, a bathroom, a comfortable place to sleep, and enough privacy. Cooking would be the hard part, but I could cope.