The cot bed we have for DS had a way of setting the height of the mattress, so it didn't matter that the side didn't drop down. However, every time I have to sleep with DS because he's really poorly I really curse the fact that we bought a cot bed. I'm 5'3" and it's too short for me to be even slightly comfortable.
I have a cot and a toddler bed, dd went from cot to toddler bed at 20 months ish as ds was on his way and would need cot. You dont need the dropside so much when the mattress is high but when they are sitting/standing and you lower the mattress is should save your back a bit.
I has a cotbed for DS1 and never used it as a bed he went straight into his big boy bed at 2 years! This time around I have gone for a nice cot I found that I could get a nicer cot for my money rather than get the bottom of the range cotbed
grobags definatley- you can put dc in them when getting ready for bed- they don't get cold on night feed, they don't kick them off, they don't wake up when you put blanket on etc. Asda do a newborn "grobags"- not the official one- but same idea and I think they are about £10-£15. I think the 1st size is 0-6months. PS. we had a mamas and papas cotbed for dd1- made a big fuss about it turning into a bed- then after putting blankets on it as a bed - dp sat on it (not heavily and cracked it) It has since been repaired and works well for as a cot for dd2- but dd1 went straight from cot into a full size bed.
Definately growbags - can get them cheaper from other places as MerryandMad says. Also might be worth checking out NCT nearly new sales as you often see baby sleeping bags there for a few pounds and sometimes unused. Our DD like others went straight into a full size single at 15mo. Am glad she did as we have no.2 on the way now and will need the cot.
ds has a cotbed and the lack of a drop down side is not an issue really. Only problem is when he sleeps at his grandmas in the cot she has or on holiday in the hotel's cot he was forever banging into the sides when he rolled over which woke him up. Cotbeds are much roomier!