Totally depends on the nanny I think. Our nanny has brought her DS with her since he was 6 weeks old and also looks after my 1 yr old DS and nearly 3 yr DD. She is amazing and it totally works as she is super organised and they all get along very nicely together. Trust your instinct I reckon.
Depends on a million things. Personally, I would consider it if it came with a considerable pay cut.
Some things to think about: Will 2 one-year olds prevent then from going places (i.e. on the bus/tube)? Will your DD be the odd one out while the boys play together? What will happen when nanny's DS is ill? What will happen when your kids are ill? What will happen when you want to sign your DS up for something like swimming? Will he be able to do this? Will you have to pay for nanny's DS to take the class too? Do you and nanny have similar parenting styles when it comes to discipline and nutrition?
Not necessarily a problem but search 'nanny with own child' threads in here for a list of things you'll need to sort out. Off the top of my head:
who provides any additional equipment eg double buggy what happens when nanny's child is sick who pays for outings/activities who pays for food what happens if nanny's child doesn't do the same activities as your child is your style of disciplining the same is nanny able to do the hours you need and prepared to get her own DS up early/go to bed late do the children have the same/similar routines and if not will nanny maintain your DSs routine
In the long term: is nanny's child likely to go to the same school as yours (school run logistics) what happens if nanny has another child - will you be happy to continue the arrangement