Well, what do YOU need? Only you can really decide the purpose of the room because you know what you already have and what you do with your time and space. Ignore the existence of the twin bed entirely for a minute; do you need a guest room at all? If you need a guest room, who would be using it and how often? Personally, I can't really see an ordinary twin bed as being terribly useful for a guest room, so if this were my situation and I did need that room for a guest room I would sell the twin bed on CL and put the money toward a larger bed, double at least but preferably a queen if it'll fit, or a good quality sofabed (I have been assured that sofabeds with comfortable beds do actually exist) that would allow the room to have another use as well as a guest room, such as a library/study/office or getaway room or hobby room.

We rarely have overnight guests (maybe a total of 2 weeks out of an entire year, although DH will sometimes sleep in the guest room if he's brought something home from work that he doesn't want to pass along to me) so our guest room is a rather irritating waste of space, and wasted space is a very bad thing in a house less than 1250sf. DH uses it as a dressing room since he gets up at 4am and his moving around to get dressed wakes me up, and he gets a nice little closet to himself. I'm thinking rather seriously about moving the library into that room, since it's a much nicer room - plenty of sunlight - and if we DID have guests DH wouldn't be disturbing them.

As for what I would do with suddenly-available space that poofed in out of nowhere... I would love to have a room to do my craftwork in - better storage (cabinets) for my supplies, a work-surface for doing beadwork where I could leave a piece in progress, shelving/racks for curing soaps, etc., as well as somewhere to put and use my physical therapy stuff like the exercise ball (currently deflated and under my bed for lack of any reasonable place to put it, fat lot of good it does me there), a yoga/stretching mat, traction equipment, etc.

Johnmarie - I used to make soap - loved doing that....I agree a room for crafts, flower arranging, garden planning, gift wrapping...that would be wonderful.

Hmmm... You could make a huge dressing room for yourself! Tons of shelving! Great lighting! A makeup area at the built-in desk space! Shoe shelves! A leopard-print chaise! (well--for some people, maybe!).

Or a little cozy den with the most comfortable reading-friendly furniture you can imagine!

Or if you're like me, and have the TV in the bedroom, move it to the spare room and turn the space into a little movie theater! SurroundSound! Light-blocking draperies! A pair of beautiful leather recliners! And you can find out whether it really IS better to NOT have a TV in the bedroom!

(Just who might be sleeping in that twin-size captain's bed anyway?)

My "empty" room was my loft space (the top level of my townhouse). It houses my computer printer, 2 bookcases, a desk, sewing machine, 2 closets (one with shelves for out-of-season clothes and my suitcases, the other with shelves for office supplies, fabric, crafts stuff, my bill/impt papers filing bins, other "stuff of life"), and a terrific chair-and-a-half and matching ottoman. Helps keep "stuff" from cluttering up the rest of the place!