Welcome to the Quilting Board Trystine, from Southern Ontario, Canada!
Such great memories for you and your sister with these sheets.
Like many before me, I would agree, leave them uncut.
Of course, providing they are all in good enough condition for such.
Then, I would use them either as a "whole cloth" quilt or a backing.
If you wanted the sheet to be bigger, you could add borders around. Rather than totally plain fabric borders, you could do blocks such as stars, flying geese or whatever. Or maybe there's something of significance to you and your sister, and your memories that could be part of the border? Maybe applique your names or nicknames in the border area? Or even favourite sayings?
Whether you add to the sheet fabric or not ..... what about using minkee for the flip side? That'd be sure to give the two of you lots of huggy-ness to go with those memories!!
Good Luck!!!!!!