I remodeled my family room, which is 20X13, to make a std ceiling into
a cathedral one with two sky lights. The difference was dramatic. It
went from being a small, dark, room to one that is large, open, light
and inviting. The area above had been unused attic space. I am very
happy with the decision. I included motorized skylights which I have
used quite a bit and add to the attractiveness of the new space.

I agree with the advice not to make the room square. And a cathedral
ceiling will certainly cost less than adding a whole additional room
above. Whether you want an additional room or a cathedral ceiling
depends mostly on your own uses for the spaces. As far as resale, that
depends on a lot too. If the house is on the small side, then having
another room upstairs could be a big plus. If the house is plenty big
and the cathedral ceiling fits in well and makes a dramatic difference,
then having that could be equal to, or better than having an additional
room.