I wouldn't stop talking to your niece, she didn't do anything wrong so why take it out on her. I don't know how your family dynamic is so I can't give you the perfect advice, but I do know what it's like to be the kid caught in the middle of a parent and a relative feuding; I just saw my grandfather for the first time in 20 years last year because of crap like this and am just now starting to pick up where we left of when i was a kid. I say ignore your sister and keep supporting your niece's new endeavor.
