I've been thinking about your question. I haven't actually made a memory quilt as you are describing but I have made labels for my quilts, not all of them, though. In this case even though they will know it is their grandma, I would still add her name, just as a remembrance of her. I recently spent the week-end with one of my grand-daughters who lives in a different state from me. She is was so pleased to show me the quilt I had made her, on her bed. And then she turned over the label and so proudly read it to me. It was so sweet and has really encouraged me to continue making labels. That label included the name of the pattern, her full name and mine. Plus other info. Anyway, I don't think you can go wrong adding your sister's name. At some point they may just enjoy reading her name. And also wanted to add, it is such a great thing for you to make the memory quilts!