In my experience playrooms do not function well, as young children will always want to be in the same room as you! It usually ends up being a huge open cupboard. Maybe you could just make your utility larger and add a load of extra toy cupboards. Good storage can make more difference to a house than an extension.

A conservatory should always be seen as a room for spring and autumn, not winter or summer. It can also very easily spoil the room that it is attached to. A conservatory is a very bad location for any sort of storage, and also no good for computer gaming (too much glare!)

A garage conversion should be cheaper, and is easily reversed if needed (if the door is filled in with timber boarding and a window, and not brick.) Do you have a double or single garage, now? If double, reducing it to a large single with lots of storage should be fine.

We've had a few different houses/layouts as our kids have grown and have found the ideal play space is off the kitchen, preferably with glazed doors - you can keep an eye on them but can also keep the clutter under control and reduce the noise levels when necessary (ie the wii!). When they get older they have a manageable degree of privacy. My husband always argues the case for a garage but I disagree, they are often full of junk which can happily live in a big shed, I'd rather have the living space and for a family home kid-friendly areas are probably higher up the wish list for most people than a garage . Full conservatories are tricky to manage in terms of heat and light (especially with a TV). Hope that is helpful.

Lots of food for thought thank you. We're now thinking of making a bigger utility room with lots of storage and a table, then leaving half the (single) garage as a store for bikes etc. I also like the idea of getting a conservatory and putting a dining table in it so we can use the current dining room as a playroom/snug off the kitchen. We only need this house to work until oldest is about 10 probably but it's still tricky trying to future proof every decision!

IME conservatories are great in theory but not in practice. They are either cold or hot and quickly fill with insects in the summer. They're not actually very pleasant places to be in general and can also look a bit twee. I'd go for a garage conversion, or, if you want to retain the garage, go for a garden room (glass walls, solid roof) or an orangery (some solid walls, glass roof).