Shared Bedroom and Sleep Issue

I say, separate them.

The toy room, is less important.

I HATED sharing rooms with my sibling.
It was a really, unpleasant thing.

Your youngest is just being her age.
It does NOT, synchronize, developmentally, with the 5 year old.

The toy room again, is not a big deal.
A child should have their own room, if possible.
Their 'own' toys and belongings, can be in their own respective rooms.
That is also, what childhood is.
Kids, do not have to.... share everything.
They each have their own, identity.
That is important for a child.

There is a big difference, developmentally, between a 5 and 3 year old.
I hated, being in the same room as my sibling.
It was AWFUL.
Just oil and water.

I would separate them. Buy toy storage for each room and put half of the toys in each girl's room. You can always switch them around depending on who plays with what more, and chances are, they will end up playing in each others' rooms. I HATED sharing a room with my younger sister and had a lot of resentment toward her until my parents separated us.

I personally would separate...

Buy toy boxes or toy organizers for them to keep their toys in and give them each their own space.

If you can't afford a new bed for your oldest daughter - i would unstack the beds and put hers in her new room...what's more important is they each have their own space!!

What difference does it matter what room the toys are in? They will not be playing with them at night.

I recall my sister and I having our own rooms. I had a Daybed and my sister had a full sized bed and matching dresser. Since I had more room, all of the toys were in my room.

But my sister knew if my door was closed she was to knock and ask permission before coming in. I really didn't mind, because we were responsible for putting alway the toys we each played with. There was a huge difference in the toys that were mine and her toys also, so not much overlap on that.

Split the kids up. Let them have their own rooms.
Go through the toys and get rid of the ones they don't play with. That will cut the toy pile in half, I'm sure.
Split the remaining toys between the kids - depending on who plays with what.
YMMV
LBC

I don't think separating will help either. I think a little talk is in order now (I know they seem young, but could understand it) and let them know you don't want to separate them but that it might be hard for big sis if she keeps waking up from her visitor. Obviously they just like to be together. And is it you that is upset they are having a little visit or did your 5 year old say she doesn't like it? Sometimes we worry more than we have to. Sometimes that might be the security a little one needs, especially before kindergarten starts and the occasional anxiety that goes with it. You can let them know they will still be able to do bunkbed visits on weekends, etc.

My 5 year old and 3 year old girls share a room which they genuinely enjoy (at least for now). Occasionally we have issues with the younger one waking up the older one in the morning. We just tell the 3 year old to tip toe out of the room when she wakes up in the morning and not to wake up her sister. We have to remind her once in a while, but it generally works. She's always very proud of herself when she does it and comes to tell us that she tip toed very quietly.