I am not a great fan of crates. Admittedly this may be because of my background - coming from the UK where the use of crates, is very very rare (certainly in the 29 or so years that our family have had dogs I have not met anyone who uses a crate).
Our first dog was paper trained within a few days, we did used to restrict his movement around the house by putting up a gate separating the kitchen and laundry area from the remainder of the house, this is where he slept, ate etc.
Our second dog, we were persuaded to get a crate/kennel for, as to be honest we were not sure how Canem would react to another dog in the house. Now Josie was fine with the kennel, although I suppose it was unfair to her to see Canem have free run of the house, so she did begin to act up. She too would wake us in the middle of the night crying as she was lonely. She also started to chew the inside of the kennel (despite having numerous toys, bones and a kong in the kennel). I also had concerns about her liquid intake during the day so provided her with a water bowl, which she promptly started chewing and tipping over. The times before the water bowl she was drinking insufficient amounts of water during the day and suffered a few episodes of urinary infections.
Part of the reason we got Josie was because Canem is a nervous dog and needs company, so to have her in a kennel all day just emphasised his loneliness, he could see her but they couldn't play together. I too had problems and issues with putting her in what appeared to me a very restricted space.
Now they both have free reign of the lower floors. They are not allowed entry to the bedrooms during the day. Josie's kennel is still up and the door constantly open - she rarely if ever enters the kennel. Canem has never made an attempt to enter this kennel. I could not see myself ever using this method again.
Restricting Canem to one room worked well when we were training him - he actually retreats to the kitchen when he wants 'quiet time', certainly I wish we had used the same method for Josie.