You can have the best monitors in the world, but if your room acoustics are bad, the sound won't be accurate and you won't be able to judge levels and frequencies when you mix.
I would say there are two main considerations. Stereo Image and frequency balance.
Stereo Image:
When sound enters the room, it is reflected by the walls, ceiling, floor, desk - pretty much everything that's non absorbent.
This causes problems with stereo imaging because the more reflective the room is, the more the sound bounces around and the more distorted the stereo image becomes.
This is less of a problem in larger rooms as the sound waves lose energy as they travel so by time the reflection gets back to your ears it is alot quieter and more delayed so its easier for our brains to seperate it from the mix in the speakers.
Frequency balance:
Rooms resonate at different frequencies. I won't go into the exact science of it but basically parallel walls are bad because sound waves bounce back and gain amplitude and take longer to decay. Bass frequencies are more powerful and if they take a while to decay, they will generally sound louder but phase cancellation will help kill them eventually.
There will be frequencies that have wave cycles the same size as the distance between your walls / ceiling and floor. If the walls are parallel this is a major problem because that frequency will bounce back in phase with the approaching wave. Two waves that mix in phase will gain amplitude will create a noticeable peak at that frequency. Then you also have peaks at harmonic frequencies. You also have the same problem with waves that bounce back out of phase wich cancel each other causing dips at those frequencies.
The worst possible shape room is a cube because the distance between walls , floor and ceiling are the same so that frequency is boosted 3x.
The best shape room would be a room with no parallel walls, but in the real world that's hard to achieve - especially if it's in your house.
So, the most effective way to dull the peaks and tighten the stereo image is to reduce the amount of reflections by using absorbent materials which will help remove energy from the waves and / or diffuse so they reflect in different directions
You can buy foam panels to absorb the sound. Generally, the thicker or more dense the foam is, the more effective it is at absorbing bass - and bass is usually your main problem area.
You don't need to cover your walls in the stuff, just put it up where your ears hear the most reflections - In front, to the sides and behind the listening position. You can use CD racks as diffusers, anything to break up the sound.
Sorry for the long post, but I've got nothing better to do

Anyway, hope it helps.