There are a lot of homes out there with small bathrooms. In this situation, I am a big fan of tiling to the ceiling. I know it sounds counter-intuitive, but tiling to the ceiling actually makes the room look bigger. It does not make you feel fenced in, which is the typical fear.
When you have a line of tile going around the room, your eye follows the zig zag of the line. Typically in a bathroom, you see a lot of tiling of the shower to the ceiling, and out side the shower to chair rail height.
One thing I never like is showers tiled and the rest of the walls paint. This looks like you ran out of money.
Here are a few bathrooms that I tiled to the ceiling. One bathroom was only 4′ x 5′!!!