I think some good arguments have been made on both sides. I don't think the OP should give up her vacation and drive 7 hours to attend the birthday party.
Quote from OP:
A few nights ago I was talking to my brother and he brought up Nephew's birthday. "DN's 3rd birthday is XX date, you know you could come..."
"Oh, DB, I'm sorry," I said, "but that's the start of our vacation week. We just can't."
"Yeah, well, great," he said sourly. "So you'll miss it again."
"It's unfortunate, but it just lines up that way. We're locked into that week."
"Well, I can tell you, DN's birthday isn't going to change. So I guess you'll always miss it."
True, Brother was not very gracious. Guilt-tripping and whining isn't cool. But what I got out of it was that he was hurt that his son's birthday was always--not just this one year, but into the foreseeable future, and in the past--going to be less important to the OP, than the OP's vacation.
It sounds like the OP is going to try and visit them at another time, so maybe when she makes those arrangements Brother will be able to express himself more politely and maturely. I think he was hurt to be told by his sister that a "non-essential" commitment was forever and always going to be keeping her from attending a special event with his family. And yeah, people have lives and the road goes both ways and it's a long drive, but I think it can be painful to have the reason just laid out there--"Don't expect us at that, ever, because we prefer to do something else fun at that time."
I don't think the OP did anything wrong; she told the truth, her brother was disappointed, he handled his disappointment badly. I personally don't think his disappointment was unreasonable, though--there was a polite fiction that the OP might, in some future year, be able to attend the party at this time, and the OP dispensed with that. Brother should have concealed his reaction better. But I don't think his momentary slip necessarily indicates massive self-centeredness about his children or anything. Maybe other things about him add up to self-centeredness, but to me this one incident of disappointment seems normal.