Tbh what would bother me most would be the lying. All she had to say was "Oh, I'm so sorry I can't come to little sister's carol concert, I've already promised I'd go with my friend to her kids' one and it's on the same night! I hope you have a good time and sis enjoys it though!" it would still be disappointing, but she's an adult and has made her own plans.
I'm 27, I have a 26 year old brother and a 10 year old brother ... I have my own life, work etc and I do spend time with my parents and DB10 but I was just leaving for Uni when he was born, then spent 8 years abroad, so I missed out on a lot of his childhood ... my DB26 didn't go to Uni but went into an apprenticeship so spent more time with DB10 whn he was little, but we still do more things together, without DB 10 not because we don't love him or want to spend time with him, but because we're a year apart in ages and can arrange things to suit us, without having to factor in school/parents' schedule and all sorts of other activities etc.
Also were your best friend's niece and your daughter friends as they were growing up or is this a new realtionship? Because you can hardly blame an adult for wanting to spend time with her friend, and the fact the friend has kids so they do kid things, is just part of life. My best friend has 3 kids - 10, 4 and 2 and I spend a lot of time with them because I spend time with my friend - we try to get together at least once a week and it's usually in the evening, so I'll go over, help her DS10 with his homework/reading while she sorts her DDs out with bath/bedtime and then when they go to bed we crack out the wine ... that doesn't mean I like friend's 10yo more than my brother, but I just spend more time with my friend, and therefore her kids