We saw the arm's reach co-sleeper at the baby show when i was in 2nd tri and decided on that. Luckily OH's Dad had offered to buy us one of the "big" baby items so he paid.
Toby still ended up in our bed from being about 3 weeks old though. Although it was great having him right next to me in the co-sleeper, i still had to fully wake up every time he woke for a feed, lift him out, sit up with him, feed him, wind him and place him back in. I'd then settle back down to sleep for maybe 20 minutes before he was stirring ready for another feed!
One night i just lifted him out and lay him next to me and fell asleep feeding him and after that decided to do some proper research into bedsharing and how to do it safely. I bought "3 in a bed" (a book, by Debra Jackson) and we co-slept full time until he was 3/4 months old, when he started to spend a little bit of the night in his co-sleeper again. We have gradually built it up so he now spends over half of the night in the co-sleeper, but we still have him in our bed for a few hours most nights.
As for a normal cot and taking the side off- i think it depends on your bed frame. If the bed frame sticks out, there is a gap issue, otherwise it should be fine, although you'd probably want to find a way to fix the cot to the bed iykwim?
Also, i don't know if you've already looked into it, but you might be able to get a bedside co/co-sleeper 2nd hand and just get a new mattress?
Hope that is of some help anyway, and congratulations on your pregnancy, hope you enjoy it