Look into large bookshelf units, ie something like Expedit from Ikea. They serve as a great room divider. They come with backs on them, but you can also leave them open backed by not attaching the back.

Hey Steena L., this is a common challenge that many people face but don't worry, it is more than possible to create an enjoyable living space with limited real estate! I've actually written something on this topic so check it out and then send me any questions that you may have or areas that you would like further clarification. I think this is exactly what you're looking for. It's call "How to Decorate a 1 Bedroom" Here's the link: http://bit.ly/1d8Lcr5 Hope this helps. Let me know how your project is going! =D
-Cheryl Khan

You could also use the straight panel curtains from Ikea. Hang them from the ceiling; they're 24" x 108", but you can cut them to length. http://www.ikea.com/us/en/catalog/categories/departments/Textiles/10702/

Some more ideas from around the houzz:

Thank you all for the great ideas! I'll be redesigning my space within the next couple of weeks and I'll be sure to post photos.