Hello, Jessica!
The studio size at Bay Lake Tower at Disney's Contemporary Resort is cozy, that's true, but a family of four, especially with young children, will fit just fine in it.
The sofabed opens up to be a double-sized bed. If you left it closed up and used the pack-n-play (which comes standard in each studio and villa; you'll find it in the closet) you'd have the most amount of floor space for playtime. Because it's a double-sized bed, however, you might just want to open it up to see if you prefer the feel of the room without adding a crib or pack-n-play, too.
For a great view of the space, take a look at
the floor plans of Bay Lake Tower at Disney's Contemporary Resort. You'll see a row of tabs right below the main photo; click on the 360 Viewer or Floor Plans, both of which will enable you to see the space properly.
You're going to love this resort! BLT truly is beautiful, and you just can't beat the convenience of staying in a Disney Vacation Club property right next door to the magic!
Send more questions as you think of them, Jessica! We love to help!