I love my "Graco Pack 'n Play Playard" (why they only put one 'y' in it is beyond me). I haven't heard anything and couldn't find anything negative about them or any other brand as far as this question goes.
Yes, it's a play pen, but the marketing folks changed the name a while back because people complained that "children are people and should not be kept in pens like animals".
I used mine for both of my kids, ages 9 and 5 1/2. My daughter, aged 9, used it on a daily basis, but not for over-nights, until she was a year old. Her favorite thing to do was to stand and jump in it, that's why we stopped using it for her. My son, age 5 1/2, slept in it more than his crib or his bassinet; he used it for over-nights as well. We put it away when he learned at age 1 1/2 to climb INTO it to get toys I kept in there after he was walking. We still have it and use it when company is over. It is still in great condition: no weaknesses in the joints or squeakiness anywhere.
I looked up the Pack 'n Play Playards on www.gracobaby.com. The recommendations are for children who cannot climb out and are under 35" tall; it does not mention weight, but my kids were about 3 to 4 years old before they reached 35 inches and were about 2 before they reached 25 pounds (all kids are different, I know, just for comparison of usage). My kids both started walking at about 12 months (they were more interested in rolling balls and sorting puzzles than chasing the cats on to the couch), so they didn't climb OUT of the Pack 'n Play and they never got the chance to learn to climb out of the crib because we moved them to big beds before that happened, about 1 1/2 to 2 years. The changing table insert is for children under 25 pounds in wieght.
If your pediatrician hasn't mentioned a concern about their developement, then don't worry about it. My sister thinks she knows everything about raising kids by what she "hears someone said" even though she has no kids... YET. I can't wait to see how she short-cuts things once she does :)
Just remember: YOU are the Mom. So long as you're kids are safe, what YOU say goes. Have fun. Your sister just loves you, that's why she gives you advice.