So, obviously a bed is required. Assuming small rooms (~3 squares), what are the best objects to place in the rooms? I've always assumed a Table and Chair would be tops, but if I manually assign rooms that ends up being a pain in the ass. I saw a video on youtube where the guy said he liked to put cabinets in the dwarves rooms. Does having a chair/table of their own significantly increase their happiness? Or can I just put two random pieces of furniture? I imagine if I found the type of furniture they liked it would give them more happiness, but I don't feel like checking the wants and desires of hundreds of dwarves.
In the current DF2010 build, the only important things are a bed, to make it a bedroom, and a cabinet, because that's the only storage your dwarves will currently use, so reducing the amount of junk left around as they randomly discard their clothing (junk that can't be cleaned up by any means short of a magma scrub or atom smashing, because it's still marked as owned).
Any additional non-movement-blocking furniture is fine for bringing up the room value (and therefore the happiness it grants); I like chests, bags (it's easier to get high-value bags than most other furniture), weapon racks and armor stands. Even a movement-blocking furniture item, like a statue, is okay if you put it behind the bed (and designate the bedroom before you have it moved in, so you get the full value of all your walls).
Ordinary dwarves are perfectly happy with only a 1-square bed. More generous Dwarven overlords suggest that at least 3 squares are preferable: a bed, a chest (for owned clothes) and a cabinet (for owned everything else-s). All three of these objects do not block pathing, so compact housing might use as little as 1x3 rooms, sometimes even sharing a door with neighboring rooms.
Chairs and Tables themselves do not increase a dwarf's happiness by much (unless a dwarf has a fondness for one of the two), but they do so indirectly by increasing the value of their room.
Nobles -- mayors, barons, and their ilk, often demand certain items in their room, and will be displeased until the demands are met. Some of the nobles will even get unhappy thoughts if they perceive another dwarf's room to be swankier than their own (assuming the noble holds a higher position than them; a mayor will never be upset that the King's opulent holdings far outstrip her own).
In short, if you are only looking to increase happiness, bedrooms are not the area you want to be focusing on -- legendary food and drink, consumed in a legendary dining room, offers a far simpler (not to mention easier) solution than customizing each dwarf's apartment to their own masochistic needs.
As long as your dwarves have a room of their own, they care little for the actual quality (nobles excepted). Also, due to a bug in the current version of dwarf fortress, owned clothes will never be stored in chests (or worn, for that matter), and given that the dwarven economy has yet to be implemented in DF2010, dwarves are unlikely to own other objects, making the inclusion of chests and cabinets rather unnecessary presently.