It's a temporary problem for the stroller, but not for the giant car seats. By the time they are out of giant car seats, their legs are long enough that you can't put anything on the floor under them.
And then they want their bikes in the back of the car, and things like that.
Until this year we had two civics, so similar in size. It was fine, if I went grocery or target shopping, I took out the stroller, put the older child in the cart, and the younger in a carrier. By the time the younger was in the cart, the older was semi-reliable to walk around the store.
We really started to run into problems with long car trips, as packing the stroller plus luggage was a huge hassle. It was also a problem when our older kid wanted a bike, and we needed something else as well (either stroller or a second bike for the younger child). Then when our older got a 20" bike it became impossible. Wouldn't fit in the trunk no matter what. And we could no longer camp, without getting a hitch and a little trailer, or something like that. We weren't sure we wanted to put money into that, when we found ourselves needing more space constantly- it felt like we would be continuously taking the thing on and off, having to store it, generally being a massive pain. I am not going to meds with hooking up a trailer when my kid wants to bring his bike to the park!
We were gifted a minivan, which solved the problem. If we hadn't been, we were getting to the point that we would have wanted a Subaru or something. Not huge, but a little bigger than the civic. The thing about us, is we have no local family, so we do a lot of fairly long car trips, and we camp. Plus, DH only drives about 5 miles round trip to work. So basically the van doesn't get driven much for stupid around town stuff where it is a waste to drive a huge vehicle. But when we really need the space on trips, we have it.
Obviously we *could* deal fine with the civic. But like I said, these annoyances of four people in a small car were not occasional, they were regular. And since we have no debt other than our mortgage and a pretty good savings rate, we thought a larger car was a reasonable thing to spend money on, and would make us happier. I do hate that we use more gas, but since we are usually loaded up with four people, on a per person basis we still do pretty well.