Should I apply F1 Visa for niece when applying I-130 for my sister?

You cannot omit your sister's children from an I-130 petition. I-130 contains a question on point where you have to list all children and spouse of beneficiary. As to possibility of getting an F-1, you nieces can apply for F-1s before you submit your 130 petition on your sister's behalf.

The process of petitioning for your sister would take about 10-12 years under the current processing times so your nieces would age out anyway and would not be eligible to immigrate with their mother. You might as well file I-130 for your sister and when it is time for the nieces to try to apply for the F-1 visa, they can try to do that as well. Please let me know if you have any additional questions or how I can be of further assistance to you in this matter.

Assuming that you are a US citizen and that the intended principal of your petition is your sister, the petition is on 4th preference [brother or sister of a US citizen]. It is generally agreed that petitions in that category will take at least 12 years ( longer if the alien is from countries such as Mexico or Philippines) Despite its long processing time, filing such petition without including your nieces reduces their chances of immigrating with their mother, [your sister] when the petition eventually becomes current. If you have the requisite financial and other means, an option to consider is to first file F-1 visas for your nieces that allows them to come to the US as nonimmigrant international students. After their arrival, you may then if you wish, file I-130 petition for your sister, and including your nieces in such petition. Realizing the unduly lengthy 12 year wait for processing F4 petitions, note that there are a number of shorter immigration alternatives under which your sister can come to the US. We will be willing to discuss such options that may be availing to your sister.

You must disclose or list all of your sister's children when you petition for her on form I-130. However, if you are concerned that filing a petition for your sister may hurt your niece's chances of getting a student visa, you can always file a petition for your sister after her daughter has applied for and been granted a student visa.