Love, I have to admit I do think it was somewhat [censored]! My sister does send me the latest school photo of my nieces but she knows I want a copy. Still, it's never given as a birthday (or other) gift.
Unfortunately people can become a little selfish when they have children, even family. It is very possible that your sister will come to realise how she is behaving but it's possible she may not. It's a difficult situation, and one that you need to handle very carefully. How do you mention it to, say, your parents without putting it in a way that sounds negative?
Jennifer B has my idea about presents. When financially stretched I will spend weeks making very professional and unique products for family members (and ones that they really like and that their friends often start asking about commissions for, which I don't do needless to say

) Alternatively I will go all out to buy something that is very unique, that reflects the person, that I absolutely KNOW they will love and that there is no chance of anyone else buying them.
Sunshineallie is sure right about the cost of studio pictures! They're not cheap and if your sister is stretched financially then those are the last things she should be getting.
I really don't know that you can say anything directly to your sister without potentially alienating her (mothers, especially new mothers, are not remotely known for their use of logic, reason and rationale!) All I can suggest is that you really keep your distance. I'm sure you love your nephew but you are an aunt, not a parent or sibling, and there is absolutely no onus on you to see loads of your nephew. If you think about how often you see your own aunts and uncles (if you're anything like the 'norm') then aunts and uncles are actually fairly distant relations. Maybe if you busy yourself with other things and have endless excuses when they wish you to visit then she will finally realise that while her child is the be all and end all to her, he is (rightly) not the focus of everyone else's life.