Multipurpose rooms are common in most homes. You want an office? library? guest bedroom? sun room? scrap booking/ sewing room? Yes, yes to all that!
So this all might end up happening in one room of the house. No problem. All you need is furniture with a dual purpose.
This photo highlights the day bed. This piece of furniture can be used as both a seating and sleeping space. Mattresses come upholstered and you can use large throw pillows for the back.