Wow, this one is tricky. I can see points from both sides. I have a myspace page, that i barely frequent ( I still have my Christmas layout to say the least), but I would never let my 13 year old have one despite her pleading. There is a lot of bad stuff on their but i think the main danger is while the user is searching and browsing they can subject themselves to some pretty ronchy stuff. Having a private page, there is noway for the average guy to see pics. That being said, it really depends what type of "people" are on your sisters site as friends, some people have really questionable people. I would ask to view her friends site to really find out what type of people they are. Also, you can make sure that she has no personal info such as...here's me a neice at her school, jefferson elementary, and we will be going to the bronx zoo tomorrow with her class...that tells people where they can find her. Your sister is proud of having such an adorbel neice and of how her being a good auntie makes her appear, and should rightly be.
On the otherhand, she IS your daughter and it is a little un reasonable for her to insist on doing something that makes you uncomfortable. What would she say if you said she had to have a special carseat installed in her car if she wanted to drive her anywhere and she refused,saying she thought you were being paranoid. I woudl nev er let my child ride with someone who didn't respect my wishes. This can be one of those cases, too. In all reality, I think that the chances of your family having a problem are 1 in a few million, and you may mess up a relationship that both you and your daughter share with your sister, but for some, that little chance if it can be avoided completely, the better. The right thing to do is for your sister to say, sure, I will take them down if it makes you uncomfortable, but if she's not wanting to do that and realyl feels like it's no big deal, then you might have to choose your battles, which do you care about more, the VERY unlikely chance that it will ever cause a problem, or the relationships you have. Good Luck