respect that your roommate might not want pictures of babies dressed up as strawberries all over the walls. Make sure that you either agree on your decorations or else have the room divided and can decorate each side as you would like.
Read the dorm's rules carefully and make sure that curtains, thumbtacks, nails, ect. are allowed. When in doubt, ask someone in the office.
High fashion magazines have awesome black and white photos. When tastefully chosen and framed, they can make a great collage on the walls. For guys, choose a few framed vintage movie or rock band posters. They look sophisticated, and cover alot of wall space.
For a cool middle-eastern "tent" look, try hanging a large piece of fabric from the ceiling.
Cheap curtains can be procured from a thrift store, or you can make your own with an iron, fabric and fusible webbing.
If you are lucky enough to have a couch, you might invest in a couch cover, (or cover it yourself with fabric). It can change the entire look of a small room.
Look at Earthbound Trading Company for inexpensive paper lanterns, lucky bamboo, folded fans and other international decorations.