I've got the renovating bug.... WWYD

The other day, J and I were talking about future renovation dreams for our house, and discussing if someday we decided we wanted to live here forever, how we'd expand to make the house have more living space. We've talked about going up before, but I've been worried that the stairs would take away most of our actual living space, which we don't have much of in the first place. Our only other option would be to go out, which would eat up quite a bit of our precious lawn, and would break up the flow of the house. The other day, J mentioned something I hadn't ever thought of before--he suggested turning the garage into a family room. Now, before you roll your eyes, I don't mean just stick a couch in there and call it a "family room". I mean take down the garage door, replace with a window, add siding, finish the room, call it a family room. Here's the nitty gritty:

-The garage is already a "finished" garage, so the only place we'd need to hang drywall would be a half-wall where the garage door used to be.
-Then, J would use his texture gun to add texture to the walls, and we'd prime and paint.
-We'd likely raise up the floor so that there would be a step down, but not actual steps (as there are now) into the room.
-I'm picturing removing the current door and widening the walkway to bring the two rooms together.
-I'd also imagine we'd have to have heating and air vents installed, but I know absolutely nothing about that, and I'm not sure if it's something that J and my dad (he's a contractor) could do themselves.
-Our major cost would be the big old window I'd want in that room, and furniture for the room.
-Not being able to park in the garage isn't a biggie for us because a) we don't park in the garage anyway and b) our driveway fits four cars parked, and we also have RV parking.

This addition of living space would allow us to stay at this house for a significantly longer amount of time, and it would be my hope that in our backyard, J could eventually actualize HIS dream for the house, which would be to build a shop/garage off of our RV parking. So hopefully, by the time we'd sell, there would at least be a detached garage. Still, most people that I've talked to have told us not to do it--that garage additions never actually look like part of the house and that houses without garages don't sell.

So what would you do in our position?

PS- This wouldn't be an immediate project, but one that we're thinking about and considering for down the road...I love this example of a converted garage--smart thinking about the extra wall!