First of all congratulations! My kids are about the same age difference and are the same genders as yours...you're in for such a great adventure!!! It sounds like maybe your daughter was an unexpected blessing like mine, I've come to the realization that the best thing I've ever done for my kids was to give them each other and to see them together is the most beautiful thing in the world!
I used a pack and play as my daughter's bed off and on from birth to sometime between 6 and 7 months of age. We had a crib but for the first 6 weeks she used the P&P in our room and then about 3 months of age, due to well, life, we had to move into a smaller place and the kids had to share a room. I wasn't incredibly comfortable with my 2 1/2 year old son and newborn daughter in the same room right away so she stayed in the pack and play in a hallway ( I know, I know)
Anyway, there are really just 2 downsides to a pack and play in my mind.
First, it is very low to the ground so laying the baby down requires bending down pretty far and it's not always the smoothest transition from arms to bed. Our P&P had a "bassinet" attachment which was basically another layer you velcro and snap on and lays about 8 inches from the top more like a crib on it's highest setting. It doesn't take too long for a baby to get too mobile to use this but in the beginning (those first 6 weeks before moving her to her own room) it did the job for us.
Secondly, even in my higher end P&P, the mat at the bottom while not uncomfortable isn't even close to a mattress. I've known a couple of moms to layer blankets and such on the bottom of a P&P to make it softer, and that is simply not safe. Even under a specifically designed P&P sheet (which are available and wonderful) blankets don't have a place in an infant's bed.
All this said, we used it for a long time and it worked for us. My daughter went from P&P to crib, back to P&P, then back to crib, and now to toddler bed and has never suffered any sleep disruptions or anything like that.
Good luck and enjoy all of it!