I have 7 siblings, though 5 of them were grown up and moved out by the time I came around. Growing up, my 2 oldest sisters shared a room, the 2 younger sisters shared, my eldest brother got his own room, and the 2 youngest brothers shared a room. As the older kids moved out, the other siblings got to spread out. I am the youngest, so I was put in whatever room was closest to my parents, which was the smallest.
When there were only 2 of us left living at home full time, my parents downsized to a smaller house with 3 bedrooms and one bathroom. My sister shared with me in the smallest room when she was home from college. I had a double bed, and at the ripe age of 4, successfully put my feet in the middle of her back and shoved her out of the bed onto the floor. From then on, she shared a room with my brother because he had 2 twin beds! She chose his buzzsaw snoring over being pushed on the floor. When my brother moved out I got that room and my room became the guest bedroom.
So while I don't necessarily think the older child should automatically get the larger room, I think it balances out pretty well, especially if the older child is considerably older. Room locations make a difference, too. My parents didn't want little 4 year old me in the basement bedroom by myself in the new house, so it made perfect sense for my brother to get that room.