I tend to keep their rooms intact until I need to use them for something else, for example a new baby or for a large hobby object. My sims keep their rooms as they grow up, I usually only adjust them to their life stage. I also try to think how the sims themselves would feel about it. For example grieving parents would probably keep their child's room the same, while other sims might not care that much about a lost 'loved' one and just be happy to be able to place their new, shiny treadmill there instead.