Ok, some clarification points that I thought were settled up thread.
1) The lunch was always going to be on that day, this had been decided months before the family gathering had been scheduled. It couldn't be another day not due to my schedule, but theirs. They only arrived the day before and were leaving town that night.
2) I thought my Dad had informed my sisters about the family gathering and as I hadn't been informed otherwise, assumed it was still on and booked as no one seemed to be doing anything about it.
3) Then, when they were informed of the family gathering my sisters changed their minds and decided to go there instead, younger sister assuming that I'd just go along with these changes plans. That was what she ACTUALLY SAID "surely it's better if we just see each other at the family gathering anyway".
About my conversation with younger sister about this: it lasted about five minutes and it only came up because my Dad and DH were having a private chat on the way home from lunch the other day. Youngest sister asked what it was about and I said it was probably about younger sister. That conversation wasn't very long, and we then talked about other things. My guess did turn out to be wrong, but I only found out about this later. Youngest sister did agree that stirring up unnecessary drama was a waste of time and we had a good laugh.
About youngest sisters apology: she had apologised about what she had said about the baby, but completely refused to see where she had been wrong or any alternatives she could have taken other than what she did. The drama about the lunch (which she did start being unpleasant again) was the last straw for me as it was a stupid little thing that need not have gone that far.
She also expected me to "forgive and forget" what she had said about our baby which is something I've been unable to do (DH doesn't think he ever will and doesn't want to be in the same room with her), move on and have things back to normal. Any attempts to explain to her how she had hurt me (something she has not nor ever has apologised for) were immediately fobbed off with telling me not to bring up the past, something she had always a said when I had brought up past wrongs but she conveniently forgot about when she did the exact same thing.
It was then I took a serious look at the entire thing. My sister had caused unnecessary dramas about the two big events in my life so far, my wedding and the birth of my child and expected for me just to get over it. She also stirred up unnecessary drama about a little thing that could have easily been resolved. This was not a relationship I wanted my child exposed to, particularly with how she continually upset me. Telling her anything about it other than what I already have (directly and indirectly) would just draw me back in to the conflict.
So I decided to step back and not talk to her about it, it was all I could do since I knew there was no way I could talk to her sensibly. If she asked me what actually was wrong (which she hasn't, she just assumes I'm mad with her over the lunch) then I'd tell her that I'd had enough of how she treats me and stirs up conflict. But that probably won't happen as she thinks she is right.