The two story homes I have lived in always had a wood cap that the spindles were fastened to. I would think that it would be difficult to install the carpeting around the spindles and risers as shown in your first picture.
If it were my house I would sacrifice a few inches from my foyer before I would make that portion of the stairway narrower

If it were me, I would not do carpet. I prefer carpet
only down the middle or not at all.
Sorry, that did not help.
~boxer

My staircase

Agree with boxer 100%.

If you want to carpet the stairs and use the banisters into each step, you can get what's called a false tread that's a wooden piece for the end of each tread for the banister post to go into. It will usually make your stairs a bit wider, though, to do it that way.

Our first house had carpet up the middle and those oak "ends" that the balusters attached directly to. The entire time we lived in that house I wished we had spent the extra money and had the entire tread oak. I really disliked having carpeting on the stairs. Very hard to keep pristine. Not sure if you had thought about oak treads...but if you can do it, I would. I really wouldn't have the carpet wrap around...get the oak ends at least. Here is our house, the balusters attach directly to the treads.

In the first house we built, we could not afford to do the stairway with solid wood treads. We did what Writersblock suggested. Then the carpet is only down the center of the tread. Much easier to clean, affordable, and easy to change the carpet out when it's time.

I like number one.

Carpet on stairs will need replacing more often than a floor due to the foot traffic. Option #1 would be harder to clean as well as make replacing the carpet much more difficult. I would either do #2, or as suggested above, carpet down the middle with stain grade wood on the edges.

I'm not a fan of stair carpet at all, but if that is what you still want, I would vote to have the wood like in your second photo.

My entry hall steps are just like in pic 2. As others have said, it's always hard to keep the carpeted steps clean. It would be even harder with carpet wrapping around the step edges. If you want carpet, I think pic 2 would be best. Our entry hall goes strait into the kichen and we are putting in tile from the front door into the kitchen. If we have enough left after the kitchen, I want to redo the bannister and rip up the carpet. I've checked and it's oak under there!

The thing about #1 and #2 is that it's really quite hard to vacuum carpet around a spindle. If you're doing fully carpeted steps, I'd avoid that design if at all possible.

We have option no. 2 above. The carpet on the stairs is very hard to clean, but it was already stained when we moved in. We haven't replaced it yet, so I don't know if we started from new and took care of it, how it would be. I love the oak stairs with no carpet, but we have Chihuahuas and they won't walk on stairs with no carpet.

Sorry these pictures are all from Christmas, but you get the idea:

@Nini: What is the width of your treads? The staircase is gorgeous.

Wallyden, the bottom tread is 53" and the rest are 45". Thanks so much!

I lived in a house with balusters going into carpet... got real sick of banging my knuckles trying to vacuum. Now I have fully carpeted steps with no balusters (handrail attached to wall) and I realize that vacuuming stairs at all really stinks. If I had to do it over again, I'd have just wood OR a runner up the center. We carpeted our stairs because they go right over half of our bedroom and the noise factor was a problem. Anyway, if you go with carpet, I don't think you'll like the balusters going right into it.

Just to help you in your planning, the name for the kind of stair rail that deb52899 has is a knee-wall stair.

We're building and doing no carpet. I've thought of putting a runner down the middle of the stairs eventually if we need the softness. But we're starting off bare. We're doing the balusters directly on the treads.

Our friends had carpet on their stairs for a few years and just spent a lot of money to have their staircase redone so it's all wood and no carpet. Their carpet had been wrapped around the entire tread and riser, etc. so the baluster was directly on the carpet. They grew to hate it because of the wear and a family member that developed allergies. It was not an easy process to have redone.

I hate carpet. I especially hate carpet on stairs. But even if you like carpet, and like carpeted stairs, I agree with circuspeanut that vacuuming carpet around stairs spindles is most especially noxious. :-)