I think you are on the right track with putting in shelves. From a long range perspective, you may want to go with a closet system that would enable you to adjust the shelves to fit her needs as she grows.

Having a closet with adjustable shelves gives you an excellent opportunity to organize her toys into bins and store them there, out of the way. The books can be on the bottom shelf so that she can reach them along with a few favorite toys. But I'd be afraid of having a door on the closet when she's a bit older because she could accidentally get her fingers stuck or she could lock herself in there.

You could also store extra diapers, clothes too big for her, etc. in there.

For my daughter's bedroom closet (she's 2ý yrs), I use the shelves up top for storage of her stuff: diapers/pullups, wipes, some hand-me-down clothing/shoes she's growing into, toys that I limit useage, etc.

I hang only the clothes that fit her but are either nicer & are better off hung...or are out of season. I find it harder with laundry to hang everything, so these are the clothes that fit but she's not wearing daily.

At the bottom of the closet, I have a couple milk crates put together for a book shelf. I made the floor inside the closet & outside the door a little reading area for her. She's really into her books and can tear up the room just with books, so this is an easy way for me to keep them contained, hidden, and easier cleanup...but with easy access for her.

As for her clothes she's wearing daily, I find I can manage them better folded & put in a dresser.

My dd has two closets too. We have a 4 bedroom house, but 3 people in our family and a 4-bedroom septic system was another $3000!!!! We thought that was stupid since we only have a family of 3, so, removing one closet and have one room w/two closets alleviated the extra septic size. So...yes, we decked out one with shelving for toys and the other clothing. Works great!!!!

Thanks you guys. We decided to make on with just shelves. I agree since the room is so tiny it may make it easier not to have a dresser in there and just fold her clothes on tops shelves and make bottoms ones for books and toys, etc.

I didn't start wishing to hang my kids' clothes until they were 8 or so. Before that I actually preferred folding them into a dresser (except maybe for 2 outfits)

So I agree w/ the idea of having flexible storage setups in there--in BOTH closets, actually.

Be sure to add a hamper for dirty clothes (not diapers,of course).