In keeping with tiny house thinking, I considered how my hobbies would need to be adapted in order to better fit into a downsized life-style.
Knitting is no problem as it is a fairly compact hobby to begin with. Projects are reasonably compact unless you are into knitting bed spreads or afghans. Sweaters, vests, socks, mittens and scarves easily fit into a knitting basket. As long as the knitter can control the impulse to buy yarn (and this is easier said than done), knitting is portable, tiny house-friendly hobby. Crocheting falls into a similar category. Once again, focusing on smaller projects would be key.
Quilting can also be down-sized. While a full size quilt will require sufficient space to construct if traditional techniques are used, even this can be adapted to a smaller space if a "quilt-as-you-go" technique is utilized. Another approach is to consider smaller projects like table mats, runners, seasonal items, and quilted clothing. Below are several photos of smaller projects I have in the works.

If all else fails, the avid quilter should consider miniature quilts. If you go to your favorite search engine and type in "miniature quilts free patterns" you will have no problem finding patterns for miniature quilts. For example, at
http://www.freequiltpatterns.info/QuiltCategories/FreeMiniatureQuiltPatterns.htm there are a variety of patterns available to see if this approach to quilting is for you. If you are the kind of quilter who feels there are so many quilt patterns and so little time, consider scaling down your favorite pattern to miniature or select from the many minaturized patterns that are out there.
The picture below illustrates a completed miniature quilt - finished size is 20" square. You can find the pattern for this one at
http://www.qorsite.com/styles/mini/miniqlt.htm
Now, if I just have to find a way to control the urge to buy fabric, especially fat eighths and fat quarters (i.e. smaller pieces of fabric)...some habits are definitely harder to break than others. Oh well, what's life without a few challenges?
Cheers!