If I had a guest in my home who pulled what Sally did, they would be persona non grata. Host has my vote for not inviting Sally back. (And not e-hell approved, but maybe Sally felt so strongly about this imagined injustice she would have been fine with eating the piece that fell on the floor?)
It sounds like homebaked or modest treats aren't the norm, so I'm guessing that Abby was either low on cash and still wanted to contribute, or wanted to try something out with a group of friends. Either way, she sounded a bit vulnerable to begin with. Making Sally's comment even meaner than it would have been on its own.
Sally sounds like a self-serving viper. She hurt Abby's feelings just to make herself look superior to Host. I would not be surprised if the business angle played a part. Unfortunately, sounds like the damage was done, at least for the time being.
My advice to Host is next meeting, wherever it's held, would be to not mention any of this unless it's brought up and then, very matter-of-factly state that Sally's version was completely untrue. If it's back at Hosts' home, maybe Abby can help with slicing/serving and Host can apologize for the misunderstanding and make a joke that she hopes she doesn't drop another treat on the floor. (I know it wasn't her fault, but still.)
I'd love an update on what happens at the next meeting.
Edited to add that Sally could have eaten cake from floor, not OP. Sorry!!