I stumbled upon this cute bakery on Bleecker/Grove this weekend. It is fairly new, as I was inquiring about the cakes one of the owners made a tasting platter of pieces of cakes for me! So of course I ordered a cappucino and had a seat in the charming seating area (probably comfortable seating for 20-25).
They have a large selection of individual cakes and desserts, including tarts and tiramisu cakes. It is a bit more refined that Magnolia Bakery (the desserts don't look so "homemade") & you don't have to eat on the street (although that has its charms as well!).
I've been looking for a dessert place in the W. Village that isn't a complete tourist trap for coffee & dessert, but never really found one that had a nice seating area. Also, they do cakes made to order for birthday and special occasions.
The address is 312 Bleecker at Grove (right next to Grove Restaurant). It is open until 9:00 PM on MTuW and then until 10:30 on ThFSa, and only until 6:00 PM on Su.