Hi M.:
Here are some thoughts that haven't been addressed. Are you worried about resale or are you just concerned about how your family will adjust in the space and if you will feel comfortable with your little one downstairs?
If you are concerned about resale: look at how long the house has been on the market and how many price reductions have been made. Keep in mind that prosepctive buyers will ask the same questions as you are right now. Also, remember you could have the "perfect" house when you are reselling and prospective buyers will find something "wrong" with it.
The reason I have even put thought into it is because my husband and I are looking at homes and recently looked at a home with the master on the first floor. We really LOVED the house and thought that for resale it would appeal to empty nesters and allow privacy for those with teenagers, but we were torn on having our little guy up there by himself and ultimately decided against it.
I hope this helps even a little. Good luck with your decision.
A.