Young kids love playhouses, but they're tricky to construct. You can make the process a little simpler by starting with an IKEA bed.
Emily at IKEA Hackers details how she converted the $369 Kura reversible bed into a play cottage/sleeping area (the mattress stays in place inside the bed). I'm sure you could build a basic playhouse for less, but this is a neat solution if space is tight.
Kura bed cottage hack [IKEA Hackers]