We did that with our daughter when she was about 20 months old.  We got a bunk board instead of a box spring so that the bed was lower to the ground and also got toddler safety rails for the bed.  She slept in it all night every night for the first week with no problem and then started falling out the gaps at the head and foot of the bed where the rail didn't meet the ends of the bed.  Not a big deal since she didn't have very far to fall and that only happened for a week.  Her brother was born about 4 months later, so she had plenty of time to get used to it before his arrival.

We went to Furniture row and bought a trundle (trunnel?) bed basically it is a twin bed with a drawer for another twin mattress underneath and it has worked good so far, if he falls out of the top part he just rolls onto the next section.

If you do purchase a toddler bed they last for about a year or two and are very easy to move from one place to another. Like if your child is sick and needs to be with you you can easily put the toddler bed in your room with you. At 20 months there still so young that you might find yourself in this predicament. I would suggest purchasing a used toddler bed if you don't want to spend that much.Craigslist has tons of toddler items. I have three boys and none of them ever slept in the bed with me but all slept in the room with me in there own beds. I moved them to there own rooms when they were about 2 1/2. Also you said you are having a new baby, so you could get two uses from the toddler bed and there safer. I hope this helps and Good luck with your decision

 If you have the means and the space, I say go for the twin bed. Our crib converted to a toddler bed so we used that for the first 3 months. I was pregnant so we decided to get new furniture for him and move him to a big boy bed when he was 2 1/2. We bought a full sized bed and regular furniture so he can use it until he's grown. We put rails on bed to keep him from falling out. Once we moved him to the bigger bed he slept a lot bigger because he had more space to move around and stretch out. 

Congrats on the baby on the way!

go for the twin bed with the rails, there is no need for them to go to toddler bed except for mom's peace of mind...twin beds with rails dont increase risk of falling.  As for needing to move bed into your room, if they are not eating thorughout the night (and at 20 months they arent) they need to learn to sleep alone and in a big kid bed that way when baby arrives, one less thing to worry about!

Thank you all for your advice.  It certainly helps to hear what other mom's are doing and if it worked out.  I will take into consideration the toddler bed, but I think we might go with the twin bed and use a bunk board to make the bed lower to the floor.. 

We are very excited about the second child and will be a great adventure with 2 in diapers...

I bought a toddler bed with my first and it turned out to be the biggest waste of money.  He wouldn't sleep in it, he wanted a real mattress and more room!  After we switched him to a twin, he began to sleep all night once again. We switched our daughter out of her crib a month ago (at 23 months) and went straight into a twin bed and put a rail on.  She loves it and is sleeping so much better than she was in her crib.  Both my children are tall, so I think that made a difference as well.  Even though they weren't 2 yet, they had almost out grown the crib mattress by that time. and needed more room than a toddler bed could give them.  If you have to buy another crib mattress, the toddler bed, then later the twin bed and rail(s), it's just more economical to start them out in the large bed. 

originally posted by berryred

We are very excited about the second child and will be a great adventure with 2 in diapers...

My point is, there is no perfect timing.  Enjoy!! 

 We had a toddler bed for about 2 weeks on loan from a friend, but gave it back and got a single twin bed. Best thing we ever did. Toddler bed was too small especially when factoring in the stuffed animals that are taking over the bed.