Definitely a bigger kitchen will increase value. Is your basement a finished space? If so, moving the laundry there sounds like a great plan.

Larger kitchen without a doubt; that's what people notice and value. I understand about having the laundry room, and of your options I'd choose the space in the basement.

bigger kitchen is the way to go, you spend a lot more time in the kitchen, it needs to be functional and also expanding the kitchen will increase re-sale value ( I am not sure if that is a concern but it is important)

If you are the type of person who 'gets behind' in the laundry, I think you would hate having it in your bedroom. The mess will drive you crazy.

If the basement is a pleasant place to be, it's a good place for a laundry room.

I also love having my laundry close to the kitchen because it is convenient. But we are planning to move it to a less convenient spot in order to make the kitchen work better. How much time do you spend on laundry vs how much time do you spend in the kitchen?

Definitely bigger kitchen without a doubt. Is the closet sharing the same space with clothing or is this another closet you have? If it is not sharing with clothing, can you put shelving above and also can you close the door to it so you dont have to look at it? Most would prefer laundry on the first or second floor but basement is better than trying to put it in a clothing closet.

As others have already said, hands down bigger kitchen. If you moved the laundry to the master bedroom is there access for other people in the household to get to it without having to truck through your bedroom? If not, it may not be a concern now, but would be for resale. In this case, best option is to move it to the basement.