It's a bit thoughtless of your friend OP but I can see exactly how this scenario happened... Friend's family own a villa, sister lives in destination country, sister's just had a newborn. Perhaps your friend's sister sprung it on your friend too, and she doesn't feel she can say no (especially if it means saying no to seeing her new niece or nephew).
How much time would you be spending at the villa OP? When my baby was tiny we struggled to get out of the house between feeds, naps, etc. So depending on whether your friend is anticipating you spend all of your time together, you might find that you and your friend end up doing your own thing a lot of the time anyway.
That said, it does massively change the vibe of the holiday and will not be the relaxing break you envisaged.
If you no longer want to go (and I can see why you wouldn't) I would just be honest and say that you were looking forward to switching off for a few days, so since there'll be other people coming you'll give it a miss and you and your friend can arrange another trip together.
You might have to accept losing the cost of the flights, but presumably you would be spending much more on food, drinks, transport, etc whilst you were there.