Cage or Pen Area?
Many people feel strongly about pens or cages. I prefer the safety and security of a sturdy metal cage in case I have to lock them up temporarily. Now I have free range bunnies that are normally never caged except for emergencies. A tornado warning is a good example. I need them safely contained while I ran to the basement. I've heard good things about Xpens or NIC cubes but have no experience with them. I would suggest a cage if you can rabbit proof the main room where your rabbit will leave so that it can be free range. Others will configure elaborate pens and runs and cages with multi-levels, but I just like a cage and the freedom they deserve. If a cool, vertical, configuration will work for you when you are not home then cool. Just make sure that they can't jump or hop out of it, or push a wall out of place and escape. Yes they can be quite smart - you'll be surprised. If you rabbit will confined to a cage or pen then you must give it exercise run time out of the cage/pen for 4 hours a day on average or just do the absolute best you can with this requirement please. More info to come so please check back here again.....
Gracie & Dino's shared cage which they are never locked in. It houses their pellets, water and hay.

Oh yes, if you get a cage, please don't let the rabbit hop up and down the door/ramp without protecting their feet with a towel. I just folded it in half length wise and then just tuck a bit of it in between the rungs near the top to hold it in place and I just hang the other end into the cage. Please put a towel on the door for them otherwise they may not want to go in or come out. Note the towel on the door in the picture above.
Cage size can be a tricky one to figure out too. A dwarf is a small rabbit and shouldn't need much room right? NO.
Dwarfs are high strung, have alot of energy and need room to hop and move around in a cage. Cage size should be a minimum of 4 to 5 times their size. Remember the cage will have to hold the bun, toys, hay, water, food and a poop dish.
If you get a cage, stay away from the old fashion ones that have a grate for a floor - those can cause serious harm to your little bun's feet. The are not good for your bun!
Did I mention a hutch? These can be and expensive and work well but you really need to think about the space you have and how easy it will be to let the bun out of the hutch for daily exercise.
You can also create a rabbit run in your house for your pet rabbit to exercise. Rabbits like to run on carpet not on smooth surfaces like wood floors or tiles. If possible give him or her an area that has carpet so that they can do a bunny 500 for you. It's the best when a rabbit runs as fast as a race car!
Want to be creative and make a different home for your bun. Check out some of these sites:
http://sprowtybun.tripod.com/nic.html
http://princessblackie.homestead.com. Go way down to the bottom of this page for a pretty cool bun pad.
http://www.rabbitnetwork.org/articles/NIC.shtml
http://www.3bunnies.org/housing.htm
Take some time and think about the space you have. Keep in mind you can always go vertical since rabbits like to hop on things and jump. So don't just keep everything at floor level - think up!
NIC (Neat Idea Cubes) condos are popular to use for buns.
Here is a link to help you assemble your own NIC Bunny Homes!
http://www.wisconsinhrs.org/Articles/Project%20NIC%20Bunny%20Condo.htm
You could also consider large dog carriers or dog cages. Make sure you add some toys and a box a little larger than the bun to fit in with one door cut out for a hiding place.
Also is it not necessary and unsanitary to cover the floor of the hutch or cage with anything for poop. You should be using a separate container for the poop and urine.
Still not sure what to use, here are some more suggestions from Rabbit.org:
http://www.rabbit.org/faq/sections/housing.html
Indoors VS Outdoors.....
Some rabbit owners will allow their rabbit to spend time outdoors. I DO NOT PRACTICE THIS BECAUSE I FEEL IT IS NOT SAFE ENOUGH. When a rabbit outdoors even if in it's own cage, it can still become prey to another animal. Yes wild cats, dogs, hawks and other critters can be pretty clever when they have a captive little bunny in a cage and no way to defend itself. I have heard stories about bunnies outdoors that got out and ran away. Rabbits can literally be scared to death by stress or being too scared or frightened. Not good. My vet does not recommend this practice either since indoor house rabbits have no antibodies against disease or illness of other wild animals.
It is NOT, repeat NOT acceptable
to keep a rabbit outdoors in any kind of a pen or cage. In most parts
of the country the weather is too extreme for a rabbit to be safe.
Excessive heat or intense cold will kill a rabbit that is not properly
housed indoors. Here are some good reason why you should NOT keep your
bun outdoors. See these links:
http://www.rabbit.org/faq/sections/outdoors.html
http://www.rabbitrescue.com/outdoordangers.html
http://www.vrra.org/r101-outdoor.htm
Please make every effort to protect your rabbit, please house him or her in your house with you and your family! Please do some research and make up your own mind on this topic.
I also believe that all rabbits should be kept indoors at all times and should never be kept outdoors due to hazardous weather conditions and temperatures. Rabbits are most comfortable between 60 and 70 degrees F.
For more information check out: Rabbits: Why an indoor Rabbit? by the University of Miami Dana M. Krempels, Ph.D.
Cleaners / Cleaning
To clean the cage, I use Super Pet Cage Cleaner --- it's the best. It will NOT remove urine stains from the poop dishes or cage floors but is neutralizes the urine smell and is non toxic for the buns! It removes urine stains from carpet too - lifts it right out and it does not come back like a stain will after a professional steamer cleaner might.

To clean GLASS water and food bowls you can use a mild dish detergent and rinse well. To clean PLASTIC dish or water bottle DO NOT USE SOAP - it may permeate the plastic and make the dish or bottle TOXIC. Use can use a little bleach and water and RINSE very, very well. Many common household cleaners and soaps might make your rabbit sick. Others have used a combination of water and white vinegar but I am really happy using the Super Pet Cage Cleaner.
Update 1/2011 - I recently had a visitor from the UK email and remind me that in many parts of the world it is acceptable for rabbits to be kept outdoors and in hutches year round. But extraordinary steps must be taken to ensure the safety and well being of the rabbit against over heating, freezing and predators. You must be willing to monitor and take preventive measures to ensure the safe and well being of your rabbit if it stays outdoors. Within most of the US our environment is too severe for this practice (year round) I believe, and so consequently it's my belief not to house your rabbit outdoors at any time of the year. Your rabbit should live indoors with you where you spend your time in your house and not be locked away. This way your rabbit will be safe from predators and become food for some other animal.