Everybody's needs are so different -- I have a large room over the attached garage that works for me. I don't quilt all that much, but I certainly love it and have lots of supplies. After living with this set up for 2 years, I think I would prefer being on the first level of the house. It's just my husband and I, and he spends most of the day out of the house at his workshop, but in the evenings he is in his loft which is just outside my sewing room door. The biggest negative for me is if I'm sewing upstairs during the day, I can't hear when someone comes to the door (which isn't very often, but still). I think the fact that it seems a little secluded keeps me from spending as much time there as I'd really like.
As for your other questions, I prefer a room with a door I can close if it's a mess. As big as possible. I think a family room if it's big and has a door. Like others have said, the bigger the better.
Good luck with your search. We moved here 2 1/2 years ago and it was such fun looking at houses and thinking which room would be mine. Have fun on your search!