Firstly, would you be legally allowed to reduce your garden to that size? Planning laws, so far as I am aware, mean you can't build an extension that leaves less than 25 sq m of garden.
Secondly, what direction does your garden face? If an extension means your garden will never get sun then I personally wouldn't consider it.
Thirdly, can your kids play out the front of the house, either in your front garden or (if it's a cul de sac) on the road?
And lastly, would an attic conversion/extension be possible as an alternative?