Small or Not So Small?

I've been debating an addition lately.  I have a lot of friends buying homes right now and I look at the pictures or walk through their homes and feel that stab of envy.
If you live in a small house, you know it isn't easy.  Especially with kids.  Never mind the amazing amounts of stuff from Outer Mongolia that accumulates, one bathroom is hard when someone has a bladder disease.  And when it's hot out (and I don't have central air) I long for a basement.  I also like the idea of my kids being able to have friends over to our house and have it be more comfortable for everyone.
So I sat down with my grid paper and pencil and designed an addition for our home.  If I could just add a bathroom, I think I would.  But that makes no sense for resale (and that is important, I know).  Plus if you're already digging and doing the work, it makes more financial sense to add a bedroom.  So I designed a master suite with some stairs that lead to a basement family room.  A basement made sense since we'd already be paying digging and footings.  It only ends up costing about 5K more for an unfinished basement.  That's what the internet told me.
All told it would be an additional 500 to 600 sqft.  That would take my house from 900 to 1500 sqft.  A not so small house.
It blows my mind that 1500 is considered on the small side...but that's for another post.
Do I want to deal with this?
The cost? The hassle?  We evaluated adding on vs. moving and adding on wins out in the cost department.  I think they're tied for the headache department.  
Still....
I keep coming back to this:
That's right.  The tiny house.  I. Just. Love them.
And my kids love them too.  When I'm being honest with myself, the main reason I want an addition is so other people are more comfortable with my small house.  That and the bathroom, but we're managing so far.  But really, I just want one of these tiny houses.
Is that the best use of money?  Probably not.  An addition will add more value to the property.  Plus with a tiny house I'll want to take it camping, which means I'll need a truck, which means I'll have to pay for owning a truck.
But I don't really need either.
I don't think it's bad to want more space, I really don't.  We're surrounded by that.  But I just look at my friends who live in small apartments with their kids and make it work in smaller homes than mine.  Maybe they worry that none of their kids' friends never want to come over to their place... maybe not.  Do they even want their kids hanging out with snobby people like that?  What about when family comes to visit?
What say you, small house friends?  Is it really that big of a deal?  If you had 50K (or a big ol pay raise) would you get a bigger place?  Or pay off your existing one?  I don't have 50K.  I wish I did, but unfortunately it's a make believe question.