I don't think you're wrong. IMHO a party to celebrate the upcoming child is a good idea, but not necessarily a shower. I think offering to prepare a meal, take the older daughter for a play date, something like that would be an entirely appropriate gift.
Cheating is an option. . . . Cheaters never win and winners never cheat, but smart knitters who want to retain an iota of sanity do, cheerfully. ~~Kory Stamper