I think for the sake of family relationships you may need to stay with the less expensive machine. Since you already bought it, maybe you can take it out of the box and try it out to make sure the tension, etc. on it are adjusted okay?
What kind of sewing does your niece want to do? This machine doesn't do buttonholes. If your niece wants to make children's dresses, for example, you could use this as a reason for your MIL to return the machine and get the one you originally wanted. Here is a link to the machine on Amazon:
http://www.amazon.com/Brother-LS2350...dp/B00ACUBMAU/
The only site I could find that had some opinions on the machine was this one:
http://www.diaperswappers.com/forum/....php?t=1469426
Edit: The lack of a stretch stitch is another drawback if your niece wants to make easy children's clothing, as the easiest patterns often call for knit fabrics.