i'd say a larger bathroom but i'm not wildly fond of your long narrow footprint for it. hmmm.

I'd go for a larger bath, but with a larger shower area.

There are a number of reasons I prefer the larger bathroom, including that the tub won't share a wall with the nursery possibly creating a sound issue while baby is sleeping. I also think creating a nice spacious master bathroom is a better choice, unless you want a bedroom that is for much more than sleeping. But I would also rethink the bath shower area as several others have commented. I don't like jacuzzi tubs and would downgrade to a nice soaker tub, larger shower area and move toilet to the shower wall.

I cannot speak for anyone but myself, however I did see the sectional couch in the corner of the larger bedroom. That is why I put n the caveat about whether the owners want the bedroom for more than sleeping. Some people want a place other than their bed for reading, television etc. However, based on the layout, the television is not really set up for optimal viewing from the sectional, therefore it would be a reading nook, perhaps? However, there is no coffee table, bookshelves or anything else that makes the room seem like an oasis from daily life. The area is not, imo, well integrated in to the rest of the room. It strikes me as very cramped and not at all functional, more like an afterthought than an integral part of the whole.

Larger bathroom would be nice, looks pretty small in the other option.