I've slept with all of my kids, usually to about age 3 or 4, but my almost 7 year old (current baby of the family) is still in bed with us - I need to start to transition that one!;)
do we really need to put our bed on the floor and up against a wall?
I think with all of my kids the bed has either been on the floor or against a wall and I've never or rarely had them fall out during the night. I do think one or the other is advisable for that reason...
I like my fluffy down comforter and my pillows - where will the baby go? Do I have to get rid of them?
We've never worried too much about blankets and pillows. The real issue is when they're tiny - and esp if it's a cold house and you may be pulling up heavy blankets on yourself and therefore over baby's head during the night in your sleep without realizing it. I've def woken up in the night with some sweaty babies, but that's about the worst I can say. Having the temperature warm enough in your room where you don't have to have heavy blankets is probably best - as they get older and can uncover themselves you don't need to worry about it. I use my own pillow and I think when they're really little often have a firm pillow behind/on the other side of them to keep them from rolling into crack beside bed and wall.
Does the baby go under or on top of the blankets?
I usually do under - with lightweight blankets, but you could dress baby warm enough and not put blankets on her at all.
What does the baby sleep in (clothing, sleep sack, swaddled, other?)
I've usually had newborns sleeping in whatever soft cotton clothes they were wearing during the day. I don't think I would ever swaddle at night - I think babies need time to be able to wiggle and to move toward breast, etc. A sleep sack seems fine, if not too warm and you're not using a blanket.
My DH would like to get a co-sleeper and I'm thinking it might be nice to have, but I'd rather have the baby closer
I've always found the family bed to be the simplest way for nursing and comfort - it's been said to possibly prevent sids as well, because you naturally bump each other and disturb baby's sleep a bit.
DH is worried about there being room in the bed (we have a queen and our room isn't big enough for a larger bed).
We've squished into all sizes of beds - I think a queen should be fine - unless like another mama said, the adults are large and already feel cramped in the bed without baby.