We did this about 8 years ago and have not regretted it for one second. But we had other things to consider as we still had many children still living at home. But, we built a huge exercise room on the first floor that has a large bathroom, (built handicap accessible, in case any of our parents or relatives needed to come live with us), a washer/dryer combo closet, and a refrigerator closet. My long arm machine lives in this room along with all the thread and rolls of batting.
Above that we added 3 bedrooms, one of which is my sewing room. At one point it had a queen size guest bed in there, but as the children have married off we moved it out to the unoccupied room. I would give up my sewing room if I had to, but so far it has not been needed (it is the largest of the 3 new rooms). We did need to replace the heat pump/AC unit to accommodate the addition, but the new ones are so energy efficient that our electric bill has gone down 50% and the house is much cooler because of it.
We were cautioned about resale value, but decided that we wanted it for our needs now and would let the future worry about itself. We have enjoyed our home and there can not be a price on that for me. My daughter-in-law and 2 grandsons just spent the summer with us and 3 days after they left my daughter came with her family to recooperate after having their 5th child. My husband and I have no regrets on our addition. I think in the long run it was cheaper than therapy as I very easily could have lost my mind on any given day.
Hope that helps ~ Pat