I have one angel baby girl, she passed away at five months old. She was born on Christmas Day, so celebrating her birthday has always been a little tough for me. It is our custom to make a cake in her honor and take flowers and balloons out to the cemetary after we've had all of our Christmas activities for the day. We also raise funds for the hospital/research group looking to find a cure for the rare disease she had. We usually put that in our Christmas letter. One other thing we did was plant a tree we received from her memorial service.
I have two other daughters 4 and 2. They are aware that they had an older sister. It is important to my husband and I that our little girl not be forgotten, but not in such a way that our other girls are adversely affected by it. The best piece of advice I could give your friend is to do what feels right to her. Family and friends are very supportive, but can't relate to her situation like she can. I hope these suggestions help your friend.