The absolute essentials
You don't have to be a hippy to love a sarong. In fact once you've travelled with one of these cotton Swiss Army knives, you'll wonder how you managed without one. Sarongs fold down to almost nothing and can be used as a bed sheet to protect yourself from skanky hostel mattresses, a covering sheet to protect you from mosquitos on hot tropical nights, something to wear while you wash every piece of clothing in your backpack, a beach towel, a pillow case or a bag. If you're travelling through warmer climates, leave your bulky towel at home, and you'll find that a wafer thing sarong will be more than adequate to dry you off after a shower.
These coin-sized, inexpensive compasses are a Godsend for orienting yourself and guidebook maps. Just stepped out of long distance train station, but don't know which way to head? Just look at the compass. On a bus and not sure if you're headed in the right direction? Look at the compass.
These compasses will also protect you from dodgy taxi-drivers. Once you've taken off in a taxi, put a map and the compass on your lap, and pretend to look at it every now and then. The cabbie won't try and drive you around the block ten times if he thinks you're checking up on him.
Be careful though, the cheaper the compass, the less reliable it is. Check it against the sun every now and then to make sure it still points North.
Toiletry bag with hook
Chances are you'll be taking a toiletry bag with you, but having one of these specialised camping / travel bags will save you a lot of hassle. The hook means you can hang it off just about any surface, and when you're taking a shower next to a questionable squat toilet on some mysteriously slimy floors, you'll certainly appreciate it.
You can stuff clothes into large Ziploc bags, sit on them to expel all the air and then seal it up. Voila! Instant space-saving vaccuum sealed bags. Use them to bag your wet or dirty to stop your entire pack from contamination, and smaller Ziploc bags can be used to store loose odds an ends in your pack and waterproof important documents like your passport and airline tickets.
A durable pair of thongs (aka flip flops, depending on which side of the equator you hail from) are not only light, space-efficient and easily packed, but they'll save your feet from the fungal playgrounds of communal showers and are far easier to put on for a quick dash to the corner store than ankle-high, lace up hiking boots.
While this only really applies to travel through developing countries, these anti-bacterial hand gels can be used as stand-in disinfectants and will protect you from many gastrointestinal dramas. Imagine this: you're on the sixteenth hour of a hellish twenty hour bus ride in Laos. You haven't washed your hands for over a day and spent most of the sweaty trip in contact with filthy seats and livestock. A friendly local offers you some coconut rice from a hollowed out bamboo shoot and you're expected to break some off with your hand. Are you game?
Other really useful stuff
Sweets and small gifts
A pocketful of small sweets and / or trinkets from your home country will instantly ingratiate you with children and locals, particularly in developing countries. I always carry at least a dozen or so small clip-on koalas in my pack: they make a great standby gift when invited unexpectedly to someone's home, and they are a more subtle gift than crude cash.
A mess kit
Essential if you're self-catering in expensive, European destinations, a small Tupperware container will keep your food (and any potential spills) away from your clothes. Things I always have in my mess kit: a teaspoon, travel salt and pepper shaker, tea bags and a few sachets of sugar swiped from obliging restaurants.
A small roll of durable gaffer tape, with its cardboard inner tube ripped out will collapse down to pack neatly in your bag, and will come in handy at the least expected times. Whether you need to mend a noisy Chinese hotel door keeping you awake at night, tape up a parcel to send home, or cover a loose spring on a Bosnian bus seat that's been digging into your back for five hours, you will find dozens of uses for humble gaffer tape.
While you may be able to get away with holding up fingers to indicate the price of something in some countries, trying to indicate 35,400 dong to a Vietnamese market vendor is not going to be easy. A calculator will not only let you fire off quick currency conversions, but will also let you (and the vendor) key in various prices.
Not only will you make your dentist a very happy person, but waxed dental floss is remarkably strong. Create instant clothes-lines in hostel rooms, darn a pair of socks or create your own binding for pages torn out of a guidebook. It's small, compact and very handy.
Got somthing to add to my list? Disagree with something I've said? Tell me off by posting a comment below.