It will act as great storage, a place for the kids to play and even a guest bedroom.
We have a basement that's never been finished, but is used to do laundry, hang clothes on clotheslines (gas furnace is down there; clothes dry in a flash in winter time); as kids we skated on the cement floor, had a ping pong table, and did messy craft projects there. It's handy, but not essential. Good luck.
First you should check with your local city planning department and see what building restrictions they have on the property. If you can do it in two stories you will find it a lot more convenient to get up and down and probably more economical to build. Consider how you will get furniture to third story. Try using basement as a family room or in part for spare bedrooms.
My husband and I recently bought an inexpensive home that we plan to completely tear down and make our own interior the way we like it. We plan on two floors for sure ( the main level and upper), but I'm unsure of whether or not to finish off the basement. I have four children, and each have their own bedroom in this house, and there are 4 bathrooms, so it isn't a necessity to finish the basement, but I was wondering if it would be practical. What are the advantages and disadvantages of a three story home vs. one that is only two stories? If we are to finish off the basement, what are some ideas for that space ( it's a fairly large area). Thank you for any suggestions and comments! :)