I took the boys to that kid's craft class at Gymboree a couple months ago, and that's when I truly realized that they needed more room to play in our home. The knick knacks were removed from their bedroom awhile ago in order to create a more peaceful sleeping environment for all of us (I don't see that changing any time soon with the third baby on the way). ALL of that stuff spilled over into the living room in what quickly became an unmanageable mishmash of family entertainment time and toys.
So I pulled my office supplies out of the area adjacent to the boys' space and took over the guest room, leaving them a whole second room to play.
We haven't done anything particularly fancy with it yet. It's pretty bare, actually, which works well for their purposes. They can make as big of a mess as they want in here, and I don't have to stress because it's totally out of my way!
We have some areas for them to stash paper and (washable) markers in cubbies on the wall, as well as a huge roll of butcher paper hung from the ceiling. Back behind a curtain in the corner is a little closet where we pile all of their toys.
I scored the butcher paper at a craft store a long time ago. To hang it, I simply painted a PVC pipe and slid it through the paper roll, stringing paracord through it to hang from brackets in the ceiling. I pull it down for them and let them go to town.
Over to one side of the room, there's a little loveseat where I can sit and nurse baby number three when he arrives. I threw a washable blanket over it because I know that an assortment of crumbs and colors and toddler goo is bound to wind up here.
Case in point.