I think your mom & sister are wrong for the way they appear to treat your wife and daughter, but your wife is also wrong for issuing "ultimatums" over your family, while seeing things her own family does as "okay" that's also "playing favorites".
Your position in the middle isn't easy however, you need to stress it to your mom & sister that you have 3 children not 2. If they can't do something for all of them, then they can't do something for any of them. By ignoring it or not putting your foot down, you're letting them know that this behavior is acceptable.
I speculate (which may be accurate or not) that this is how your mom did things, since your mom and sister seem to have similar patterns of how they treat your young daughter.
However, with your wifes family, when they do things the the daughter you have with her, do they exclude your other children? If so its the same concept of what your mom & sister do. My brother & his wife have 2 children of their own and then they have a nephew of hers who lives with them because his mom passed away. Her family, will pick up her nephew to do things with him, spend the night, etc however, they never include my niece or take her anywhere. My niece by the way, is their family too. When I decide to do something for my niece like take her to lunch, spend the night, go to the movies, etc I also include brothers wife nephew, I buy them both things for christmas, birthdays, other holiday's etc and I make sure the gifts I give them are in the same price range, and they have the same number of them. The third child in this situation is an infant so he has limitations of things he can do yet.
Ultimately, your family isn't going to change and neither is hers, you both need to accept the differences between the two families and not let it effect your relationship. Your wife shouldn't be issuing ultimatums because of your mom & sisters behavior, these are their fault and choices, not yours.
Yes, I think you should stand up in your sisters wedding, ultimately at the end of the day she is still and will always be your sister.
Your sister is wrong though, 4 years old is a perfect age for a flower girl.