I had the mini co-sleeper....it was perfect. We never attached it to the bed as an official "co-sleeper" but left it next to my side in the bassinet function. Perfect for small spaces. One thing to consider is that it only works until the baby can roll over or reaches a certain weight. We moved DD over to the crib by 10-12 weeks so the size wasn't an issue. I guess it depends on how long you want to co-sleep with baby in the room.
I don't know about other brands of sheets fitting. We bought 2 of the Arm's Reach type--I don't think you'd need more than that unless you rarely do laundry. Craig's list has these every now and then. We bought ours off of Craig's list for half the price in pretty much mint condition--the family had used it once and repackaged it. If you're sketched by the used mattress, you can buy that separately through the Arm's Reach website.