The attic will likely be colder in winter and hotter in summer than will the rest of the house. It will take more energy for both heating and air conditioning than the rest of the house, for this reason. So, to save money, the attic would best be used or things such as a guest room which are not always in use. This would save on both heating and cooling, since it need be heated/cooled only when in use.

Thus, the idea of putting the guest room in the attic is appealing. This does not help with your other boundary conditions, however.

David's comments are very practical. :^) More abstractly: The attic bedroom will be the most private one in the house, giving its residents a sense of being separate and isolated from the rest of the house. My parents' house from when I was ten through leaving home was like this, and they had the upstairs bedroom for much of that time; until my sister became a teenager and wanted a little more separation from the rest of us, at which point they swapped into what had been the guest room, let her move up there, and turned her room into the guest room.

Your family may of course be different, but that's how it was with us, and I've seen other configurations where an attic or garage room started out as a retreat for the parents, and then turned into a retreat for the teenagers.

We have a 1.5 story house and the .5 story is a converted attic. Our kids' rooms are both on the ground floor & we use the attic as our bedroom. I like the space (it's almost a 2nd family room for me because I spend all day in our family room/office space in the basement) & the privacy. Unfortunately, there isn't a bathroom in the attic space, so the downside is having to go downstairs in the middle of the night!

We also can't hear the kids from their bedrooms so we're still using baby monitors even though they are 4.5 and almost 3. We plan to continue to use the monitors indefinitely & will probably only quit when they are several years older.

We added some insulation to help with the hot-in-summer, cold-in-winter problem, but it still definitely exists. If your contractors are working on that space at all, you may want to consider additional insulation. We also had an energy audit (very cheap through our local energy company) to test where the leaks are & give us suggestions for improving the efficiency of the house & that space in particular. Now we just need to implement them (need to do some caulking ASAP)!

I actually think it's easier to have it be a bedroom because if it was an office I'd be in there in the heat of the summer day & we'd have to run the AC a lot more. This way, we just run the AC (an extra window unit - even though our house has central air, it doesn't make enough of a dent up there on the hottest days) before bed & often it is just on fan mode at night. In winter it isn't as much of a problem. We don't care if it's cold up there during the day & at night we layer on flannel sheets & a down comforter and occasionally run a space heater when it's bitterly cold.

I'd sandwich the kids in the middle (ie 2nd floor) because I don't think you're going to want to be running up and down all the stairs for all the naps, checking on their playing/whatever all the time. You're also more likely to hear any yelling/screaming while you're downstairs. I think if they're in the 3rd story, you might not hear them at all without a baby monitor. Plus, the whole heating/cooling thing.

For what it's worth.

Second floor for the kids. You'll easily be able to hear them from either the first or third floors.