We do it.
DD1 was 27 months when the baby was born, and already sleeping in the twin bed in the girls' room. We didn't want her to feel pushed out of the crib by the baby or anything like that, so we took it pretty slowly starting her in the "Big girl bed" for naps. She picked out sheets, she got to have a pillow for the first time, fun stuff like that really helped.
We use room darkening shades and a white noise machine. Baby waking in the night to nurse never really seems to bother DD1, who is not a great sleeper though has gotten much better than she was. I nurse baby in a glider in the girls' room and none of it bothers DD1. She has woken, popped her head up, seen me there with the baby and rolled over, going back to sleep - as if to say, "OK, Mom's got her, I don't have to worry about the baby."
We don't have toys in the bedroom. While it's a decent size, it's not huge. Between the closet, the twin bed, the crib, a changing table, dresser and the ottoman and glider, it's pretty full. But it also prevents the older one from waking and deciding to play in there, waking the baby.
Good luck! It can be done!