...snip....Ridiculing one's host is just inappropriate all the way around.
It just wasn't clear to me that she was ridiculing the host. If she was, then of course she was rude, no question, full stop.
But as I said above, there just isn't enough information to determine if niece was mean or the LW was totally over-reacting. It would never occur to me to really link a phone to person's sense of worth or well being or anything like that. It is simply a possession.
I has a "stupid phone" for years. It worked well and served its purpose. Now I have a smart phone. I love my smart phone but I'm not a better or worthier person because of it. (Though I am a person who gets lost a LOT less so maybe I am a bit better).
There are excellent reasons to have a "smart phone" and excellent reasons to have a "dumb phone". Personally, I was a little tickled when my friends would make fun of my dumb phone and refer to me being stuck in the last decade and pointing out pictures of huge phones and calling it my phone. It was "our thing" and it was affectionate.
Insulting the host is bad. Teasing a piece of technology is not.
I simply don't have enough information to determine what happened at that dinner table.