Friends of ours got a cover for the new baby's crib that prevented the cat from jumping in there with him. Mostly I'd be worried about the cat waking up the baby, considering those little guys can be hard enough to get to sleep as it is.
Personally, I would not be worried about the cat and the baby. There are plenty of websites that explain ways for the two to coexist peacefully, I searched "cat new baby" and found lots of hits.
If it were me, I'd take some precautions before the little one arrives to be sure that everyone will be safe and sound. Take the cat for a check-up and be sure that her shots are up to date. If if is an indoor-only cat, have her claws clipped (or do it yourself), to prevent any scratching accidents. My cats know not to scratch people, but we end up with the occasional scrape due to them falling off a leg or miscalculating a jump. No one wants their new baby to get a scratch!
Urge your sister not to get rid of her cat! At least give the cat a chance to get along with the child. As the previous poster has said, it's such a wonderful thing for a child to grow up with animals. It teaches them love and compassion for living things, and animals love kids too!
My favourite blogger posted a video of her son with their two dogs
. It always makes me smile!