I would split it up :)
This is how we have it. On the ground floor, a large kitchen, next to it the hallway with a large corner bench for 12 people. From the kitchen, you go out to the outdoor seating area.
On the upper floor is the living room, next to it a small kitchenette. I think it is optimal this way and wouldn't want it any other way. The living room is hardly used in the summer anyway, because you prefer to be outside then. In summer, the kitchen is more important; we shuttle from the garden to the outdoor seating area to the kitchen. During the day, we are rarely in the living room throughout the year – why would we? A lot is done outside, crafting etc. is nicer at the large table in the hallway anyway, and in the evenings with friends it is also more pleasant in the hallway, especially with board games or celebrations. The living room, on the other hand, is a more private space to relax, away from the ground floor hustle. And the TV only runs in the evening for a DVD and is not an all-day activity.