At the end of the day it is all about what we call "neighborhood conformity" and ensuring that the master bathroom will pull more value for the home (once I know how much it is going to cost you) versus keeping the 3rd bed upstairs. At certain price points 3beds on one level will pull a very good price, where as the lower price points (under 170k) it usually does not matter because a lot of its competition does not have this feature either. The splits will just have 2beds up and 2beds down with a full on main floor and 3/4 in basement.
So essentially it is all about the trade off in your specific market. I would need to know the property address to tell you one way or the other.
Are you taking on this project and planning on staying in the home long term or planning on moving soon? If you would like some free help just contact me through Trulia and I would be more than happy to help.