My husband and I once shared an interior room with his mother and we were fine. It got a little crowded at bedtime because none of us could use the bunk from the ceiling, so they had to bring in a rollaway each night.
If it's at all possible to get three rooms, I'd agree with Lana. If there's a little extra room in the budget, it would be wonderful if you parents had a balcony. Everyone would enjoy it.