We have a toy room and its the best thing in the world. It used to be open on half of one wall so we put glass multi fold doors in. Keeps the noise down, keeps the mess in and also will be good when #3 comes along in that he/she won't be able to get in there to the girls' non-baby/toddler friendly toys. Down the track when the kids are older it is big enough to put in desks for them to study.

I love that the kids have their own space, and they know that their toys stay in there, although some occasionally drift into their bedroom for a party or something!

I would be using your lounge area as the play room and the spare bedroom as your sewing room. With 2 kids and another on the way you will probably need more space for their play than a bedroom.

I hope you enjoy making your house YOUR home!