Depends on the kids, the circumstances etc. In your family's case, if they plan to get back to Disney again when the kids are younger than teen age, then it really doesn't matter if they go now when the youngest one will likely not remember it much. Especially if it's a free trip, and esp. if it's a chance to travel with the grandparents who might not be around or in good health for that much longer. Your SIL must be able to plan to accomodate her kids though - it will mean splitting up for parts of the day. It will be no fun for anyone if you try to make everyone do the same thing. Small kids can enjoy Disney, but only at THEIR pace!
We are waiting til our youngest is 4 (or almost) (late 2006 or 2007) because 1) we don't think we'll be back in any hurry, and we want it to be a memorable trip for all, plus we want all the kids to have enough stamina to make it in the parks for hours at a time becasue we will be offsite for sure, 2) we don't want to deal with diapers, 3) we need to earn a few more FF miles to get our airline tickets for free.