My great nephew is 10 (almost 11) this year, and knows that he will get the same gift he has gotten for the last 3 years from me. A Visa giftcard. He loves it, and I enjoy the ease of shopping.
It has gotten to the point that he only really WANTS a few things, and once his parents and grandparents have gotten those, there is really nothing on the list. By giving him cash or giftcard, he can get a Video game, buy cell phone minutes, or save it for something he decides he wants later. Let's face it, he gets so much stuff from everyone else (divorced parents = 2 Christmases , then factor in Grandparents), it isn't like he doesn't have stuff to open.
I do think it is rude to put "money" on an unsolicited list though. If you asked, it is possible that your sister was thinking that it might be easier for you.