Any suggestions for fun exercises you can do in a small ring? I have been doing circles, changes of gait, figures and have run out of inspiration. (My horse is recovering from a hip problem and needs to stay away from anything too "bendy" and poles/jumps for a little while; we're also limited to walk/trot for now.) 

If you are looking for something to challenge him and keep his mind engaged - try clicker training or teach him tricks (bow, pick up a leg, touch his belly, etc.).  You can always work on leg yields, side-passing, turn on haunches, turn on forehand. 

 There's a wonderful book called 101 Arena Exercises by Cherry Hill which has all kinds of ideas. I'm pretty sure Amazon has it. It could give you some ideas on different things to do.

 I've seen that before. That's a good idea...I think I'll get it-thanks!

 We have been trying lateral work, which has helped a little bit. We've suffered a major setback though. He has a bad stifle which I thought was finally worked out, but then hurt his front hoof while playing, so is off for a while. Your clicker training idea may be all we can do now! Have you tried it yourself?

That's a great book!  I have it myself and use it from time to time.  Many of the exercises require more than a "small arena", though.  You have to pick and choose what you can use. 

There's also lots to do in the Linda Tellington-Jones books.  There's plenty of ground work there that will keep the horse engaged and interested.

For my part, when my gelding was returning to work after a very long layoff, I made up games similar to what my daughter did with her beginner students.  For instance, I put things in the ring--cones, Bloks, hay bales . . . whatever was handy.  Then I plotted a course and rode around them at a collected and extended trot.  She actually made it a timed race, so I had a stopwatch and counted the steps out loud.  My gelding absolutely loved the counting part!  I have no clue why unless it was just the added excitement of my breathless voice.  LOL  I'd try for fewer and fewer step each round (more and more extension).  No lateral work. 

I'm also heavily into clicker-training, and that gelding has about 15 great tricks now.  He enjoys that so much that I keep a driving whip (I use that as a pointer) by the pasture gate.  As soon as he sees me pick it up, he comes running and is ready to perform and learn whatever new I've come up with.

Sometimes layoff and recuperation time is the best thing for your relationship with your horse!

Have you thought about just getting some drive lines and a surcingle and hitting the road/trails? Line driving (where you walk behind the horse as if you were in a cart) is a good way to get out and keep his mind fresh, keeps him alert to rein aids and voice commands and you can keep both yourselves in good condition without taxing his body.

I'm 8 months pregnant so to keep my horse sharp, I've been doing lots of line driving, longing, etc to keep him in working order while I'm too clumsy to go for a long trail ride. I've noticed he's really enjoying the change and waits by the gait for his work to begin.