I built a small studio on my third floor/attic two years ago.
I went with a couple of monolights by Elinchrom. Though, for quite a while, I used just one.
I keep my space pretty dark (helps create the deep shadows that I love) - so regular strobes weren't much of an option for me as they lack the modeling lights that are critical for my style of shooting.
(A less expensive option would be alien bees lights. Many people speak highly of them.)
If you do get monolights, don't get hung up on the power. 200/ws or 250/ws will be all the power you need, unless you have a huge space. My main light is 250/ws, and there are times when I still use a ND filter on my lens to get a narrower depth of field.
I use a couple of different soft boxes - one square and the other a narrow rectangle, which is great for 3/4 body shots or for those times when you really want to control where the light is hitting.
I have a couple of 7-foot-tall reflector panels (one side white, one side black) and a big round silver reflector.
If you plan to use seamless paper, you'll need some sort of stands/holders for that. And one tip on paper - don't leave the rolls laying on the ground, as it will ruin them. They need to be stored standing up.
In my flickr stream, every studio shot was done in my small studio.
http://www.flickr.com/photos/tbarker/
