I sew in my basement/laundry room. I have no problem with it other than the floor being a little cold (I threw down an area rug to warm my tootsies). It is not the prettiest room (I just posted recently about thinking of reorganizing and painting it) but it works for me, it is out of the way, it has enough space, and it would be essentially wasted space otherwise. No problems for me with light, I have a long bar of flourescents that were already down there and I supplemented it with an Ott light right over my sewing area. When I get around to buying new bulbs for the fixtures, I will get full spectrum lighting and it will be glorious!
I think space is more important than location - if you can't make the space upstairs work well for you, then go for the switcheroo!