In regard to the first part, you might want to consider your son's age (depending upon his age is he old enough to be asked his personal choice - move or not move?); his attachment to his room; which room functions best as a nursery, and if your son is ready to leave the nursery phase of his life and move to the pre-school phase.

If you determine he will stay in his room, what might you do to change his room from the nursery look to a pre school look? Maybe it is as simple as replacing a nursery appropriate wallpaper border with a pre-school age wallpaper border, replacing his crib for a youth bed and a matching dresser. Then add some pre-school age appropriate pictures on the wall, a bulletin board for his art work and important things to be displayed, a nice bedspread and all of a sudden he has grown up a little bit.

If you determine he will move to the other room, you would probably keep the current nursery as is for the new baby (especially since you do not know the gender of the new baby) and re-do his new room. If your son is old enough, you might consider involving him in the decorating decisions. For example you could choose 3 different wallpaper patterns that are pleasing to you and ask him which one he would like for his new room, giving him an opportunity to express his personal choice and create his new space. Moving to his new room could become an important part of his becoming a big brother, developing his own style, learning about making choices and thus self esteem building.

It seems there is no right or wrong answer to this question, only your answer based on your unique situation. I trust you know your son and yourselves well and will make the right decision.