Can't speak to babies, but we were definitively told NO when we tried to use a DSU to upgrade for two adults and two kids (ages 4 and 6) at the Grand Hyatt in SF. Max occupancy of 2 - only king rooms and no room for a roll-away. So we're staying in a standard double room. Seems crazy that the larger room has lower occupancy, but whatever. For what it's worth, the in house reservations team is actually pretty good if you call - they saved us $$$ and points by re-booking us, but not willing to bend the rules.

We're having an even worse problem with Asian properties - max occupancy seems to be 3 for any room, forcing us to get two rooms. We generally would just show up with a reservation for just one room and all squeeze in, but have been advised that a strategy such as that could cause problems in Asia if you are caught.