Sleeping in living room is worse imo. Like I said, we have one bedroom. We all sleep in the bedroom. It means the living area can be used all evening and morning and day whilst anyone else sleeps. Otherwise as soon as one want to sleep in living room, everyone else would have to leave.
It means typically here kids go to bed around 9pm, then Dh and I can carry on our evening in living/ dining/ kitchen (it's open plan). We can have people over for dinner party etc and kids can sleep when tired. Same in reverse, in the morning, whoever wakes first can get up and start day in living area. Sometimes for us that might be one adult working at desk in living room at 6am, one child in to play at 8am, leaving the other two to sleep.
Again if someone is ill, they can stay in bed all day, whilst everyone else carries on with life. If half of us slept on sofa bed it would be a pain as in the way and having to get up first each day.
Honestly teens sharing are fine. Grandma and mum sharing are fine. Then that leaves the living area free so if one teen wants to do homework project late at table they can whilst other sleeps in bedroom. If granny or mum or teen wants friends over for dinner/ play games whatever they can carry on whilst anyone else can head to room if they want.
Have space to do stuff in both spaces. Ie we have a desk in bedroom, and desk in living room, plus large dining table. Means one of us can head to bedroom to work in peace, or can work in living room whilst table in use, or kids at desk each or at table.
Get good lamps also in bedrooms so each person can read whilst others sleep.
Nowadays there are lots of ways to semi separate rooms also using dividers, cupboards back to back, curtains or similar if wanted.