I recognize this is a forum geared towards frugality, but really the question your sister needs to answer is...does she WANT more kids? Because if she does, the consequential decisions that follow will all seem worth it. If not, then those decisions will feel like burdens.
I have 3 (6, 3, 1) and one more on the way. I honestly haven't noticed a major increase in household expenses with each child after the second. We do do things differently than many of our 1-2 kid peers, but none of these have felt like major sacrifices. Our kids share rooms, and will for awhile -- no way around it. I hung onto my 5-seat wagon as the family car for as long as possible, because new skinny carseats are still cheaper than getting a van or SUV. (With the 4th, I'm going to have to get something that seats more!) I found a full-day preschool option for my busy second child to avoid having to find additional (and frankly more expensive) activities that he could do at school anyway. I cook almost every dinner, and make enough for leftovers for lunch the next day. We've used nannies or au pairs instead of daycare, because the cost is fixed regardless of the number of children. Travel is more of a challenge for sure (especially airfare because it just is), but vacation rentals work better with young kids anyway, and kids really don't care if they're on an air mattress vs. a real bed. I am the crazy baby carrier lady (I've sold all my strollers at this point) because it's easier to chase older kids while carrying little kids. We camp a lot. And I am not adverse to telling my kids to go out back and play with chalk or water guns (BY THEMSELVES) when they are being a bit much. :)
Are there things that I would like to do but are just cost prohibitive because of the number of kids? Sure, but there aren't really that many. Overseas travel is not in the cards right now, but I wouldn't really want to attempt that with 2 under 2 anyway. Same with skiing. I'm having trouble thinking of anything else.
In terms of future finances, we plan on fully supporting our children's educations, but that's it. (After seeing the mess inheritances have caused in my family, I have no interest in creating that kind of drama for my own kids.) Of course many people have other rules (e.g., my husband's parents were willing to pay for state college tuition, and he had to cover the extra.)
I'll second the PP's link to the bigger families thread -- I got some great ideas on there, like enrolling kids in sports/activities that take kids of multiple ages at the same time (e.g. karate, swimming, music), sticking to sports at clubs, and generally not over-committing to too many activities per week.
Best of luck to your sister. We love kids, so the decision was easy.