Yeah just normal decorations, wall hangings and drapes will definitely help.
We use fiberglass acoustic panels in our sound room, and I'm not sure if we just covered them with cloth ourselves or if they came that way, but they definitely absorb a good amount of sound.
Here's a good website that offers some very nice soundproofing materials, not especially cheap though:
http://www.silentsource.com/afoams-tecnifoam.html
If you want to go super low budget you could try putting up some eggshell foam that is intended as a mattress pad and that will also create some insulation between you and your neighbors.
Jason Hicks
Aperion Audio Guru