It's natural to want to do the whole 'nursery' thing for your DS, OP. One room all decorated for the baby. Especially if this is going to be your first and possibly only blood child. I can imagine it is a big pull.
I have 3 older DDs (my husbands step children) and am expecting his first baby in a few weeks. He and i would dearly love to be able to give a room to the new baby as a nursery, but we only have 3 bedrooms, like you, and so it just won't be possible.
Our situations differ in that they are all girls, and 2 of the 3 sleep at home full time, while the eldest (20) lives at her boy friend's 5/6 nights a week (but she still likes to know there is a nice bed for her at home when she wants/needs it).
We're going to have to re-shuffle late next year when baby will need to be out of our room at night. I am anticipating baby in a room with a sofa bed for eldest when she visits. I think this would be best for you in your situation too.
I don't think it's going to be possible to give any of your children 'space to study' and 'be alone' very much, as some posters have mentioned, ie: giving DSD a room of her own for her studies. In an ideal world, yes, but many normal households don't have this possibility.
My point is really (getting there!
) that i would be horrified if my DH announced that he expected a room soley for his biological child, and that his step children should suddenly all just cope with squashing together. This is, in a way, what you are doing though. Re-think :)