Hey, I'm now to posting on here, but I've been reading every so often and just ran across your question.
We use the original arm's reach and LOVE it. DD is almost 5 months and still sleeping in it. It's been great, as I can just reach over and get her and then put her back after her 10-minute nightly nursing sessions. We tried co-sleeping, but she sleeps less when she's co-sleeping than when she's in the co-sleeper.
However, we use a nursing pillow that she sleeps in, so she's not rolling all over the place at night. She loves to snuggle in it and looks like she's content and snuggly.
I did use a pnp when we were at my parents' house (she was about 2 months old) and it was all right. It wasn't the basinette part, but the bottom mattress. She sleep just as soundly there as in her co-sleeper.
However, I did end up with an unexpected c-section and was so thankful to have the co-sleeper. I didn't have to bend all the way down, which for me would have been a killer.
So I always recommend the co-sleeper.
Have you thought about side-carring a crib if you don't have a lot of room? Here's a site I ran across a few weeks that got me thinking about it. When we move out of the co-sleeper, it's probably what we'll do. http://www.freewebs.com/sidecarcrib/index.htm