I am very easily pleased with regard to where I knit. However lace-knitting does require more concentratation so I can't cope with too many interruptions. So, ideally...peace and quiet.
My favourite time and place is early morning before anyone else is about, at the kitchen table where the chairs have no chair arms in my way and the light is perfect (night or day actually, the kitchen is about the only well-lit room in our house). I like to listen to radio 4 and have a cup of tea near by.