I've not read everything yet, but I have a gap of 4yrs1mnth between DD and DS1, only 19mnths between DS1 and DS2, and I will have 7yrs2mnths between DS2 and my current bump. Four years was too large a gap, even now, the sibling rivalry between them is immense and almost insurmountable. Although they love each other, they don't like each other.
I found having a 19 month age gap between my DS's to be easy when DS2 was a baby, quite tough when I had a 2yo and a 3.6yo, but once DS1 started full time school, it was excellent. I am actually really concerned about having a 7yr age gap this time, as if 4yrs was too large a gap, then how lonely is this dc going to be? I'm half (note only half) considering having another one to keep this baby company.
I was an only child for 10yrs, and I hated every minute of it, and unfortunately, moving out when I was 15 and my brother was only 5yo meant that we never really had the normal 'sibling' relationship that I would have liked to have. It's only now that he is 19 years old and at university living in his own place that we really get along like brother and sister.
I think the OP is projecting her fears of not being able to cope with a small age gap onto her friend. I feel that having had a 4yr gap between dc1 & dc2, that a large gap makes it much harder to find family activities to do with everyone together, as what the younger two like to do, the eldest isn't interested in, and vice versa. TBH I feel it is all down to individual choice and what feels right for you and your own family and circumstances.
And as for the OP's 'friend's' child that is struggling, some children are slower to pick it up than others, and it has nothing with being unable to give individual attention, and 5 is very young for Y1, my DS2 is in Y1, and he is currently 6years and 7months old, He will be 7 in November. The children in his class who are yet to turn 5 are, understandably, not at the same point with their reading and decoding abilities, mainly due to the fact that they are almost 10/11 months younger than the oldest children in their school year, like my son. Maybe if OP tried reassuring her friend that it is perfectly normal for her child to be behind bearing in mind her young age for the school year, instead of deriding for her lifestyle choices, the OP's friend might not feel so stressed by it all!