One data point: My family (2 adults, 2 kids) lives in 1300 sq ft, 3BR 2BA. Each kid has their own room. We do miss having a guest room, but that is an issue only 1% of the time. The rest of the time it really works for us. We downsized from 3100 sq ft, and feel that we are much closer as a family as a result. And we love all of the European travel, fancy kid camps, etc. that we can afford because we live so modestly.
