@adamftw — tl;dr Would your life be financially and emotionally better if you stayed and improved, or sold and started over?
Financially, in the short term you're probably better off improving your existing house due to the up-front costs of selling, buying, and moving (not to mention that mortgage interest is quite a bit higher now than a few years ago).
In the long term, are you nearing "overimprovement" -- the limit of what your house, in your neighborhood, would fetch on the market? Or is there some headroom to get a return on your investment from adding on and fixing up?
Now for the subjective part. Do you and yours like your present house, or see your way clear to improvements that will make you like it? Does it serve your current and anticipated needs? Are your neighbors good? Is your commute acceptable?