Well, first...let's be clear...I lost my sanity long before the current kitchen. So, there's that. But, that doesn't help much, now does it?

Honestly, you can have a tiny kitchen that works better than a medium or large one. Square footage wise, my current kitchen is at least twice the size of the house we used to have...and this kitchen is WAY less functional. My usable counter space is virtually non-existent. I have almost no outlets. My lighting is atrocious. My cabinets are terrible. There is very little positive that I can say about my larger kitchen other than it's larger. But, it has less overall storage, less usable counter area...so I found my old kitchen WAY more workable.

So, if counterspace is an issue, the best advice I can give is to clean as you go (really, sound advice no matter the size of the kitchen) and if you can list some specific things that are challenges so far, maybe we can help you in figuring out a way to work within what you have.

For many many many years I only had about 3.5' of usable counter space and part of that area was taken up by a counter dish drain. I worked around it quite successfully by cutting up and washing all vegetables in the order that they would be cooked. I keep multiple small screen colanders and bowls of all different sizes to move the vegetables to once they are washed. The last thing I would open would be the meat. While the meat was seasoned or marinating and getting to room temperature I would wash all the cutting boards and sink.
I still work this way and now that I have more counter I move all the vegetables/meat to the empty counter while I rinse off boards and load the DW. Since I use a wok a lot this method keeps me organized.

...it is possible to maintain your sanity in a space space. After all billions of people around the world do it on a daily basis quite successfully. Don't forget to chill the white wine. :)

Take a look at this:

Here is a link that might be useful: little Paris Kitchen

Of course you can remain sane! I think andreak's advice is key, clean while you go. Another hint is to streamline. If you are never going to use a fondue pot in this space, put it in storage or get rid of it. Having the fewest amount of things in your space, makes your space the most efficient.
Also, multipurpose. I cooked happily in an apartment that had 24" of counter space between the stove and the sink for years. I got a rolling butcher block cart. It held some appliances, it was a prep station and I bought one of those card table tops that is a rectangle with wings that turn it into a circle and voila, a dining table.

localeater-I forgot the rolling cart-I had one for years. They really do hold a lot.

Thanks to one and all for writing. I have always washed dishes/utensils as I've cooked, so still do that. Also have a very small, narrow table in the doorway which holds some extras. My main adjustment seems to be the lack of counter space on which to work even though the counters hold a bare minimum of necessities i.e. toaster, etc. You've given me encouragement and I'm now determined to conquer the challenge.
Thank you.

writersblock, I love that link.

My very first apartment had a tiny kitchen, which was a blessing, because it was a studio and having a separate kitchen was wonderful. I dislike kitchens in my living room.

It was a tiny, narrow room with a window at one end. Big plus there. Along one wall was an apartment-sized refrigerator and a tiny, apartment-sized gas stove. Along the other wall was a large enamel sink with attached drainboard, sort of like the one pictured below.

No counter on either side, no cabinets underneath it. There were three tall-to-the-ceiling cabinets on the wall over the sink.

I hung a big spider plant in the window, put wooden crates under the sink to hold pots and pans, filled the cabinets with food and hand-me-down china and glasses. Used a big cutting board on the drainboard to prepare food. At the time, I made all my own bread (bread machines weren't on the retail market yet) and cooked everything from scratch. When the refrigerator door swung open as I was working at the sink, I didn't have to turn around to close it, I could just kick it with my foot. Cosy, but also a really efficient work triangle.

My suggestions:

Declutter your kitchen stuff.

Figure out what you can store outside of the kitchen. The stuff you use the most should be in the kitchen within easy reach. Things you use only a few times a year should be stored elsewhere.

Check out places like Ikea (which I think has great kitchen organizers) and the Container Store. Look for wall-mounted storage solutions, and "add a shelf" gizmos that let you get more into each cabinet.

Check out double-duty appliances. A stand mixer that can also knead bread and work as a blender or food processor saves space.

Consider storing less food and shopping for food more often. This opens up more cabinet space for gadgets, gizmos and china and glasses.

Evaluate your habits. I tend to move a lot and I've discovered that each new kitchen requires some adjusting on my part in order to work efficiently in it. Storage has to be rearranged, things need to be kept in different parts of the kitchen. Don't just recreate your old kitchen. Examine the new one to see how to use it to best advantage.

That tiny kitchen I used to have? I cooked for up to 6 people at a time in there and had lovely dinner parties. It can be done.

All right gals and guys - I took everything you wrote to heart, and want to tell you that I have made six batches of different cookies, and they all taste as good as if they were made in a large kitchen. So I've learned that it can be done, plus I've gained some patience as I've solved the problem. Usually, in my age bracket (88) adjustments don't come easily, so darned if I'm not pleased with myself - and thankful for your help. Happy Holidays to all.

"I have made six batches of different cookies
"in my age bracket (88)"

Ok you put us to shame. I have friends who are less than half your age and they can't fry an egg whether in a large or small kitchen!!!
You should be very pleased with yourself for adjusting !!!

Well, uh, we need to verify that claim. Put out the cookies and we'll draw straws to see who has to go test your claim they taste "as good as if they were made in a large kitchen".

Oh, and now someone with a large kitchen needs to supply some cookies too. In the name of science and truth, of course!

I volunteer to test all the chocolate cookies!

Ditto writersblock, great video!

My kitchen in NYC is 6x7. I cooked twice a day in it. It was remodeled in 2009 and it worked well for me and my husband. I hosted dinner parties and everything. The only real issue was the exhaust since the hood couldn't vent out and there was no window.