Do I calculate correctly that the size is approx. 78 by 43 cm? It's almost impossible squeeze an oval on such small area (well, it is possible, but only few locos and cars will be able to run on it and it needs lot of work to ensure even that-- see this for an example:
http://tt-kolejiste.unas.cz/mmalekolej.html), but the space is enough to make a nice shunting puzzle a or diorama (see late Carl Arendt's website for tons of examples).
Two years ago, I planned a working diorama of an engine shed with traverser and refueling station to fit on one of the shelves in my book-case. It was +- the same size as you have, but it was intended more for static display of models and only occasional running:
http://vlacky.brozek.org/temp/depo_knihovna_2.jpgI'd suggest thinking about the prototype you'd like to model -- country/railway company, time era etc. -- and then building up on that. There are some plans in TT that I could recommend but they'd require at least 2'5 by 2'5 square space and would only be suitable for central/eastern European setting. For example this one by Milan Ferdian:
http://img139.imageshack.us/img139/8974/kopiekm005.jpg