I don't think there is anything I can add that hasn't already been said. It is a very sad situation, however PLEASE try not to let it get you down too much. Personally i'd send cards and for their LO a gift for birthday/Christmas - gives you the moral high ground and leaves the door open.
I grew up with one my Aunts never even giving me a card when I was young - to make it worse, my sister would always get something! You'd have thought she'd have at least been fair and given us both something or nothing, but nope. My mum found it really upsetting, but has just brushed it under the carpet now - luckily for her they live on opposite sides of the world now so they can't butt heads!
I don't know much about this situation with the SIL, she may well been a genuine problem. However, all of my in-laws, i'm convinced, see me as the source of all their current issues with their relationship with my OH, and I find it deeply upsetting. We moved away from where they lived, to closer to my parents as I needed to be near them when my LO was born, my OH also wanted to move and I was suffering PND - but since the move I have had nothing but grief from my MIL, who in turn spreads her dislike of me to my SILs. Despite making sure my parents-in-law saw us at least every fortnight, nothing has been good enough. Unfortunately my in-laws don't live on the other side of the world and I just have to put on a brave face whenever I see them - for my sons sake.
Anyway, basically what I am saying, SIL might not be the entire source of the problem - however, i know nothing of the situation with regards to you and your brother, so she might be. I just know what it is like to be the source of blame (unjustifiably anyway, hers may well be justified).