1. Vatican City
Size: 0.17 sq. mi. (0.44 km²)
Population: 783 (2005 census)
Location: Rome, Italy
The Vatican, as everyone knows, is the seat of power for the Catholic Religion. It is the size of a golf course and doesn't even have a street address throughout the 'nation.'
Size: 0.8 sq. mi. (1.96 km²)
Population: 35,657 (2006 estimate)
Location: French Riviera on the Mediterranean
Monaco is protected by France--originally they were to become part of France if the prince of Monaco did not have an heir--guess what? He did, now their independent and a popular tourist spot for the rich. Their economy is based largely on gambling.
Size: 8 sq. mi (21 km²)
Population: 13,005 (2005 estimate)
Location: Western Pacific Ocean
Nauru is the world's smallest Island nation and was once one of the richest nations (per capita) in the world, thanks to its phosphate reserves..but unfortunately for them, the phosphates ran out and they invested badly.
Size: 9 sq. mi. (26 km²)
Population: 10,441 (2005 estimate)
Location: South Pacific
Tuvalu makes most of it's money by a very odd trade--it sells of it's Internet country code: .TV, which also stands for TV (weird, I know)..however, they are threated by rising ocean waters and the nation may not even exist in 50 years.
5. San Marino
Size: 24 sq. mi. (61 km²)
Population: 28,117 (2005 estimate)
Location: North-central Italy near the Adriatic coast.
San Marino is the world's oldest Republic. This nation has enjoyed independence for over 1700 years and even Napoleon avoided the nation during his conquests, saying that the nation was a 'model republic.
There is a lot more information at the site than I provided, so check it out!