Is there a need for house size regulation to preserve neighborhoods?

Interesting enough, in BOULDER, COLORADO there is a fierce debate and public outcry going on within the City Council to regulate or not, the house sizes. The Boulder Planning Board unanimously prompted the City Council to put it on hold.  The planning board agreed that using a proposed "floor-area ratio" calculation - or the percentage of lot covered in finished square footage of a house on all levels. They agreed that this doesn't achieve the goals of controlling the larges homes and preserving neighborhood character.  Some say the measure violates personal property rights and could harm the economy, however, oddly enough, Boulder, is not as effected by the tightening credit markets as other areas of the country are.  Not withstanding that fact, I myself can not only imagine housing my two adult children and one grand daughter, my fiancées two children, my ailing mother and stepfather all in one 1950's size home.  If you're fortunate to live in this great city of Boulder  and are unable to buy a home by yourself or prefer to have your family with you, the only alternative might be to adjust your living situation - which might mean building onto your house to accommodate your mother and stepfather and young adult children.  Admit it folks, the baby boomers are in a squeeze with parents living longer and children not being able to afford to move out!   Boulder has a very high economic and living standard and they truly try to provide for everyone from the Boulder Affordable Housing Program to the green buildings.  Let's not bite off our nose to spite ourselves.  I am curious about how other families handle when parents and children move back in with them and what effect this has on where and how you live.  Maybe you have already experienced this in your area of the world and I'd be curious as to how it was handled by the community regulators.