iPhone no longer sending messages as SMS when recipient is disconnected from data
It sounds like the Messages app thinks that a device signed in with your niece's Apple ID is connected to Wifi or the internet, whether this be the case or not. Is there a chance that she's used her Apple ID to sign in to the Messages app on a Mac? If so it could be receiving her iMessages, thus circumventing the 'Send as SMS when iMessage is unavailable' because technically a device capable of receiving those iMessages is 'available'.

If that's not the problem, these steps have worked for me in the past so I'm hoping they'll also work for you! (You will likely need your Apple ID and password to sign back in to iMessage when you're finished.)


Disable 'Send as SMS when iMessage is unavailable' 
Turn off iMessage altogether on your phone from 'Settings > Messages' (the main/first slider)
Restart your phone
Turn iMessage back on from 'Settings > Messages'
Sign back in with your Apple ID if it has been removed
Enable 'Send as SMS when iMessage is unavailable'
It wouldn't hurt to follow these steps on the iPhone 4 as well, as there is a chance the problem is on her end and not yours (Since you haven't noticed the issue happening with any other contacts using Apple devices).


These steps didn't cause any problems for me personally with my stored messages within the Messages app, but as always before doing any troubleshooting backing up your device is a smart move! I did not design iOS so I cannot absolutely guarantee no side effects!