Is it appropriate for the groom's sister to give the bridal shower?
Why not? Many etiquette books will tell you it's completely inappropriate for the bride's relatives to host a shower, because it looks like they're trying to get gifts for the bride. (Of course, that is the entire purpose of a shower, but what can you do.) This attitude sometimes extends to the groom's relatives, too (he'll get to use the gifts, after all).
In the real world, however, the shower is more ofthen than not hosted by bride's mother or sister, even though the honor attendant is the 'traditional' hostess. Following from that, it's absolutely fine for the groom's sister to host a shower. In fact, it's more than fine -- it's a wonderful, affectionate gesture toward a soon-to-be sister-in-law.
See More: Rehearsals + Brunches , Bridal Showers , The Bridal Shower