Here's a tutorial I found on Martha Stewart's website to make an inexpensive cat house. Cats love boxes anyway, so why not use them to make a cute house?
Those are both cute little cat houses and pretty easy to make. I know my cats would love them. You're right about cats loving boxes and little places to hide in. When I had my first couple of cats I remember buying a cardboard cat house from my sister at her garage sale. I don't know where she'd gotten it from, but it was really cute and fairly large. I can't remember what happened to that thing. I had it in the dining room of our last house for quite awhile, by a window, and then I don't know what happened... maybe one of them puked on it and it had to be thrown away or something.