My experience with my own separation is that the kids are hit hard initially but get used to it quite quickly if they understand that that's the way it is now. My kids, at least, don't really like change or uncertainty. But they adapt quickly and have slotted into a new set up actually pretty well and they accept and like it now.
I'm in a different position now to you because i definitely wouldn't want to get back with my ex. But, as well as any personal preference, I'd be very reluctant now to 'undo' what I've been explaining to the kids all year, by getting back with their father.
You won't miraculously stop being bitter if you split up, especially if you carry on living together. If you stop living together, you also might continue being bitter towards each other, but at least you have plenty of time apart and more practical ways of containing the bitterness (i.e. in emails etc).
So, if you do love each other and both want to make it work, perhaps you are going through a bad patch that you want to try to mend, then sort out some counselling. Get him to cut down on gaming, carve out some time for the two of you to be a couple together and get the kids sleeping in their own beds. See if making changes like that helps.
If you've tried all that kind of thing and have had enough of living together and you're finding that it's making you (and perhaps him) miserable, then you're right, time to move out of the relationship. But if you're making this decision try to stick with it...both for your sake, and that of the kids. What's happened so far is understandable, but the kids will feel more secure if they know what is happening, rather than chopping and changing the arrangement because their parents can't make up their minds what they're doing.