Both the Reagans and Clintons moved into Blair House a full month before their inauguration -- the "five day tradition" claim is not true. As well, of course, any such "tradition" couldn't even be very old, since Blair House was privately own property until 1942. It's of further interest to note that Blair House is actually a complex of four separate townhouses with a total of 14 bedrooms and over 70,000 square feet of living space -- making it larger than the White House. It hardly seems likely that the Obama family couldn't be squeezed in.
By the way, under normal circumstances, I would agree with many here who suggest a presidential suite at a nice hotel. However, the security threat to the Obamas is very real. Just read some of the veiled racist comments made below the San Francisco Chronicle's article on this issue -- on the website of one of the most liberal newspapers in America. There is a high risk to ignoring the reality of white supremacist nut cases and the threat they represent. It is most especially morally irresponsible to put those two young girls in a public hotel and on the public streets of Washington, DC.
(So why? I remain concerned that there is a remote possibility that George W. Bush doesn't plan on leaving office or going anywhere. All George would need is a few "threats," a bomb here, a plane crash there, to justify executing one of his martial-law executive orders and democracy in America is over.)