I used to live in a small apartment (about 500 sq feet, one bedroom) and still managed to set up for kegging. It's really more a matter of how you set the place up.
You can still bottle from keg/tap, so you don't need to be 100% in either mode.
I went and picked up the fridge I use, from Sears, and modified it for holding 2.5 and 3 gallon kegs. I run the CO2 through the sides of the fridge, via gas bulkheads, to give me more room for kegs. Plus, it allows me to use larger CO2 tanks.
IF you have room in the kitchen, you could do the same thing. The fridge I picked up was less than the kegorators you see being sold. Even after adding the taps through the door. Plus, I have enough room in the freezer (top section) for all my hops.
This allows me to have just food in the freezer that's part of the main fridge.
Of course, some hops might spill over into that freezer at some point.
Towards the time when I was getting ready to move, I went and got a storage unit for some stuff. That helped out more than a little bit, for me. Now that I'm in a 2 bed, 1.5 bath house (renting it) with a basement, I'm much, much happier. I easily have enough room for all my stuff, including brewing gear/supplies.
IMO/IME, you're better off saving your money, that you would have spent on the 5L mini keg setup and putting that towards a real keg setup.