I have a fairly large house, but I'm also an hour north of SF, which while better, really just means that prices are very, very high instead of insane. My daughters share a room because even though I'm drowning in space, most of it is very poorly utilized in new construction (and this is new). My home office is in one of the walk in closets off the master, and I comfortably use less than half of it. My master bedroom is large enough to make two rooms easily, but the layout makes that impracticable. The one saving grace? The large formal living room which we converted to the main office for my fiance's business (fully utilized, shelves stacked with supplies on all walls).
The other options in the area? 50 year old houses with 75% the floor space (admittedly better used), and an actual back yard. Same listing price range, but you'll have to fix a lot of stuff immediately or soon.
Being new factored heavily into our decision process, but at this point I'm thinking we might have made a poor choice. Then again, the grass is always greener...
My wife grew up in Cupertino and thinks it strange that I want our eventual kids to have their own bedrooms; she shared a room with her brother until she was about 10. We live in a 2BR townhome and the other units in the complex (all 2BR) include a family with 4 kids and a grandfather; a family with 3 kids; and a multi-generational family with a couple, the wife's mother, and an infant.
The bargain you make for Silicon Valley is that you'll have great career opportunities, a laid-back work environment, huge diversity of food & culture, awesome outdoor sports and great weather, and a small shot at great wealth, and in return you put up with terrible traffic, near-constant work, lots of superficial people, and crummy housing stock that, if it doesn't fall down in an earthquake, will be eaten by termites in 10 years. Some people like that bargain, some don't - and in particular, it's often a better bargain when you're young than when you're older. If you don't, you should carefully consider whether Silicon Valley is the right place for you.