We kind of did what you are discussing. We knocked out the wall between two small bedrooms and made it one bigger room with a half bath in one corner. Originally we used it as our master bedroom. My husband had three children from his first marriage. In the first ten years or so or our marriage they have moved in and out of our home as things with their mother changed etc. We ended up adding an additional bedroom on to the far end of our house which is now our master. For a time our together daughter used the former master with the half bath as her bedroom. She has since finished college, gotten married and moved entirely out of the community. That room is now my sewing/computer room. At this point we don't even have a bed for guests anymore. I would recommend that you use the ground level room for your sewing area. At this point my stash is housed in a room in our basement along with our laundry facilities. The main part of the basement is a finished club room that requires a fire in the woodstove to make it useable in the winter. The steps are getting to be a challenge as I and my spouse age. I would vote for the main level workroom.