So far I've had it both ways in the same house. When we moved in we finished the basement and I had my daycare playroom down there, however I still had a little eating room ( the breakfast nook) that was for daycare along with a few toys on the main floor. This spring our basement flooded and we had to rip the floors up and bring the daycare upstairs. We haven't refinished the basement flooring and I'm not sure we ever will but I added a few area rugs and the kiddos sleep there in their cots and playpens.

So far I like it better upstairs because it is more functional...close to the kitchen and bathroom and we don't have to go up and down stairs several times per day anymore which is the best part. What also helps is the fact that I've recently come to the realization that I am NOT going to do daycare forever, I have maybe 2-4 years left in me and by then I will have my house back. And I have big plans too...new couches, new dinning table, NEW EVERYTHING when daycare is over!!! But right now my own kids are 3 and 6 so having a playroom upstairs still makes sense. I would most definitely feel differently if I was in this for longer tho and if my kids were older.

I'm also anxious to see how the new daycare room will "sell". I haven't yet had an interview with the new setup but I'm anxious to see how ppl will like it/ not like it. I've been told my upstairs playroom is better because of better lighting and because it does seem more functional so we"ll see!