Guess it depends on HOW MUCH of a sewing area you want. Just a sewing machine? Will you need an HOT iron? Storing fabric and supplies in this room?
I vote go for the basement. A few inexpensive overhead flourescent units will liven up the place. Being fully dressed down to socks and shoes helps with the body temp in colder basements. An inexpensive baby monitor can help listen for the kids during naps and early evenings.
By being in the downstairs you won't have to worry about babies picking up DANGEROUS things when you turn your head. Besides...if it's out of sight no one will see how you leave it. That way you can pick up where you left off and not have to worry about clean up - taking out - cleaning up - taking out.
I give this advice because in our other house I had the sewing machine and small ironing surface in our bedroom and it was a PAIN to do the take out and put away every time I wanted to sew. A small amount of supplies were in totes under the bed. In our current house I have about 900 square feet of space to call MY OWN ... in the basement!!! and I love it!
Good luck with your decision