Your starting point has to be a terrific tent and things have moved on from the musty canvas variety that I remember as a child. The perfect Summer palace can be found in the form of the Rose & Mint Child’s Pavilion from Shop on Your Doorstep.
PVC playhouse, just add sheets! My dad made this for my one year old daughter as a Christmas present, and it has been up in our living room ever since! I purchased some pink and white sheets at Walmart and strung some Christmas lights around the top!