For a small room, I'd prefer a twin. Full grown college students manage to sleep on twins (well, usually twin XL) in dorm rooms. Adults who share a king bed each have the width of a twin. You could also consider a daybed with pop-up trundle. That way your dd would have an extra twin mattress if she wants a friend to sleep over.

I slept on a twin into my mid twenties. My daughter is your kid's age and sleeps on a twin. So there's nothing wrong with it except... you are taking something away from her. And unless she wants a smaller bed, I wouldn't do it.

An 11x12 room is plenty big enough for a full bed. If I was in your shoes, I'd rearrange the room.

Personally I think a twin is fine. Most of us probably grew up on a twin, she will live on a twin if she goes to college as someone pointed out.

I think you have to add to that equation- what type of person is your daughter? Do you think she'll be a reader and like having a little bean bag chair in her own private room to read and do other things that she likes? With friends? Does she have a lot of siblings and this room is her refuge?
Or not? Depending on circumstances would lead to two different choices.
Also - will this be the room that carries her through her teenage years? Teenagers seem to want to den in their bedroom caves. More room less bed might be better. If she'll be trading up to a bigger room in the house or you are pretty sure you'll be moving before then, not so much an issue.
A 10 year old may have preferences if all her choices are laid out and the ins and outs of it all explained - smaller bed, gets to keep dressers, get a bean bag, or a desk or a...whatever or does she prefer the bed and the way things are? You might walk her around a furniture store and let her try on a twin bed.
I did think a trundle bed was very cool when I was small.

Last - I have friends that have opted for the beds on stilts that have ladders to get more room. Many college kids do this as well, I have even seen home built ones at college that were built at half height, just heigh enough to fit a dresser under. At 10 she's old enough for that to be a safer bet depending on what type of sleeper she is.

Thanks for your advice, guys. That idea about the desk under the bed (loft style?) is an interesting one. I always worry about my kids falling out of those higher beds - that probably never happens, but my DD is a mover in her sleep. I find her in all sorts of wierd positions when I check on her at night! LOL

One more thought: you might want to consider a twin with a roll out trundle underneath for sleepovers. Stanley made something like this.

What is her closet like? You can get rid of the dresser and outfit the closet in elfa shelving (or something similar). I did that with my son and was able to keep his full-size bed.

I like the loft beds also. Below is a link to one on Kidfurn.com. There are some really cool looking ones that incorporate a computer desk, drawers and a trundle, but they are pretty pricey, as in upwards of $1000. I don't know what your price range is...

I think you do need to ask your daughter if she wants a twin bed so that she has more space, or wants to keep her double bed.

Here is a link that might be useful: Rancho Loft Bed by Valco

You might also think about whether you are going to give her the bed when she moves out of the house... she is definitely going to want her own full size bed at that point, unless she will be moving to a dorm.

If not, the grandkids can always use the twin bed when they stay with you.

I had to share the link to the headboard, below. I just think it is the coolest thing ever. :)

Here is a link that might be useful: Parisian Headboard by Powell