For what it's worth I've lived a very happy life as a kid in a 2-room apartment, in about 70 sqm. Granted, I used to spend most of my time in front of our apartments' block, playing with other kids. If it matters I grew up in Eastern Europe.
What I wanted to say is that resorting to "but would someone think of the children?" in this kind of situation in order to mask the harm done on the environment because of McMansions and huge houses in general is the wrong way to do it.
Also, I live a 10 minute walk from this place, and pay 50% more for over 3 times the space, so they're not even that good of a deal.
The housing market is connected though, so interest in these, which may be limited to singles or couples without children, will remove some of the demand on larger units, such as yours, which can house children and families.
http://www.kvmeter.ru/information/homes_series/1_468/ (in Russian but there are pictures).
It's the same way we all lived in my native USSR, though the apartments there tended to be larger and more rationally subdivided into lots of little rooms (so, an apartment with three rooms with closing doors, plus effectively a fourth room in the form of a kitchen, plus a foyer hallway, was a commonplace thing). My biggest annoyance with American apartment floor plans is the intense compulsion to imitate houses -- a door straight into a large combined living room and kitchen area. I'd gladly trade that for more compartmentalised rooms, and a layout that doesn't require someone entering the apartment to walk through space where someone else is hanging out.
I'm not even sure you could design a space for a young family. Things change so fast, you'd need a whole economy to support it. You'd need to rent a lot of things, like high chairs, cribs, extra linen storage, etc. because you can't store anything in your home.