Everyone gravitates to the "classroom" for hacking and electronics stuff already. There's a bunch of reasons why it's the best spot for that, as stated above.
Because it's the default social/work area, for lack of a better one. Now that we've gained more space, our membership deserves a bigger work room.
The loungy stuff got taken out of there specifically to make more room for the activities JWB described.
Not sure if you were around when the furniture got moved to the basement, but that was not the most successful move ever because taking the couches out of the hacking area meant/means that they don't get used very often. The most the chairs/couches ever got used was when it was in the hacking room.
What else is needed to improve that space? I know air conditioning, but what else?
Better lighting -- florescent sucks. More room, big enough to fit 30+ people in comfort. Bring back the furniture. Get rid of the legacy equipment.
Why would we want to start from scratch in unfinished space when that room is already most of the way there?
I disagree that it's most of the way there. It's hot, bright, crowded, noisy, and uncomfortable. It's a terrible space.
Where is the electronics / hacking equipment that we need to make room for?
It got dumped down in the basement. What we really need the space for, however, is our members. It's not big enough for our group now.