My first thought was partitioning. But, if the rooms really aren't big enough, then I'm pretty sure that's going to rule out the loft use too.
Staircases can take up almost as much room as a small bedroom. Stairs in the girl's room (for the boy) would mean he would have to pass through her room. That again would not be ideal.
Plus, I can guess that your landing would not be big enough either.
You could have a loft hatch on the landing, fitted with a pull-down set of steps (there are some really good ones out there now.)
A 7 year old boy would love that.
However... furniture would be a problem. Plus: an area of the loft would have to be "boxed" to create a room. If it's a modern house, then the roof structure would rule all this out anyway. Older houses often have a more open area.
This loft would still cost quite a lot; and add no value to the house.
I honestly don't think the loft is an option here considering my assumptions on the layout.
Could you "lose" 4' from the big bedroom? That would be just enough room to fit an upper bunk bed with a desk/playstation under, for the boy. With a clothes cupboard down the other end. You'd still have the problem of him having to pass through the girl's room though.
Sorry about the long waffle, but I'm trying to cover everything.
After all that............. Eleanor's idea of a sofa bed in the sitting room for you really does sound like a solution.