Translation:Who is in the bathroom?
Instead of "儿", which is the optional location particle commonly used by people in mainland China, 里 emphasizes "inside", which best describes the location of the person in the bathroom. Swapping that with 儿 doesn't make a difference.
It would be fine to use that; however, I prefer the given sentence, which is more meaning-precise than sentences with 儿.
I mean, in English we have "toilet," "bathroom," "restroom," and "water closet." It just kind of depends on where you are and how polite you are trying to be. 厕所 is probably the most colloquial and least formal. I don't know the difference between 卫生间 and 洗手间, but I feel like I hear 洗手间 more often. I believe they are both just more polite ways of saying "toilet."