I doubt it makes them happier. It would IF you can choose with who stay in the room and move in another if you don't like the company.

I mean I had to share some rooms for some weeks with different people, it was one of the worst experience of my life: different behaviors, idea of "respecting personal spaces", idea of "maximum noise allowed", habits at night, hygiene, etc... It is really something stressful. In a prison, when you risk to end up with people you probably won't like at all, is far better to have a personal room to stay for the big part of the time.