Okay, well, here's my opinion. We have a rat terrier...like a jack russell, only taller legs. ANYWAY, she's VERY hyper around guests, and we don't like our guests to be annoyed. So we always lock her in her kennel and put her in another room when we have company over, at least until she calms down. Then once we let her out, if she acts up, it's back into the kennel. The cat hates everyone but me and my husband, so she just hides under our bed the whole time and is never a problem.
If I were you, I'd take a similar approach. Keep the dogs kinda reigned in until they get used to the guests' presence, then let them loose, but keep a close watch. Yes, your sister sounds like a royal priss, BUT...you did (I assume) invite her to your house, so you have an obligation as hostess to be slightly accommodating to her needs, even if she IS just family.
My sister has 4 cats and 2 very large and out of control dogs. My husband and I don't like to visit her for this very reason. She doesn't control her animals, the house is literally FILTHY, and we end up getting jumped on, scratched, licked, barked at, and coated in hair and dirt. Yuck! We just kind of stopped visiting. Now when we go to her house, it's just for 30 minutes or so. Can't STAND all that mess!!
In a note, yes, they are your babies, BUT...would you let your children jump all over your company and be rude and out of control? Probably not. Pets are the same concept. Only enjoyed by others if they're disciplined and IN CONTROL by their 'parents.'