I would suggest 2 things. First of course is the room. You clearly need some absorbing material, and you can get it cheaper than the foam recommended above. Medium density fiber board such as owens corning 703 works great to get rid of slap echo and has a broader bandwidth than foam. You can buy some stretch fabric and wrap these panels. The room is so small I wouldn't worry too much about diffusion, due to it's effects being difficult to manage in a small room and diffusors are more expensive. Yes, they will make the room sound better, but you need ones with the right band width, design, and placement--it's just not very cost effective. The other area I would seriously consider is changing your speakers. PSB stratus series is really for larger rooms and does not accomodate nearfield listening very well. A pair of very good monitors that are designed for nearfield imaging (not as close as desktop though). One pair of speakers (although not monitors) that I have heard work very well in smaller rooms was the Totem Arro.