"The kitchen floor is concrete"
then it will be easiest to run the pipes down the wall from above. Perhaps you can do it in a corner, or conceal with a cupboard, or at teh side of a shower cubicle. Remember to insulate them well
"hot water cylinder in upstairs bedroom"
The cylinder can be located anywhere, higher or lower than the boiler. You might consider putting it in an airing cupboard in the new bathroom. They are typically 100 to 120 litres, which is a bathfull. They are available tall and thin, or short and fat, like people.
"Possibly as part of the extension costs we would upgrade the boiler to a combi."
A combi can give a good shower, but if you try to run a bath, you will need a book to read while you wait for it to fill. Run the cold kitchen tap into a bucket, time it, work out how many litres per minute your water main delivers. This will be the maximum you can get, from all taps combined, hot and cold, at any one time, if you have a combi. So they are OK for a small household, but disappointing if anyone runs a tap, flushes a WC or turns on a washing machine at the same time, since the water flow in all other outlets will drop. If you are having a lot of work done, and can afford a big combi, you can dig out a trench and lay a new, plastic, incoming water main out to the street, in a larger size, which will give you better flow. A cold water tank and cylinder may seem old-fashioned, but can delivere water (using 22mm pipes and big British taps) at a far higher rate (but lower pressure, so not so good for showers). It is technically perfectly possible to have a combi which also heats a cylinder, so you can have a high-pressure shower from the mains, and a high-volume bath from the tank, at the same time, but this is seldom done as it is more work for the plumber.
"The incoming water main is in the kitchen"
So that is where the supply must come from, for your tank (if any), combi (if any) and kitchen cold tap. You can also use it to run an electric shower, provided you like a weedy jet of water, which will not be very hot in winter.