Congratulations on your neice graduating! It seems to be a rarity more and more.
Desktops towers have gotten smaller/shorter and they do have flat panel LCD screens these days but you can't take it to class with you.
If your neice seems to be a responsible one and appreciates the value of something, which I'm sure she is, then a laptop may be the way to go in helping her with organization and success. It is nice to go to a coffee shop or library and be able to look things up on the internet for a paper.
If you do decide on a laptop, you will want to consider a laptop carrying case (the best college student style carrying case would be the backpack style), and/or a small printer. HP/Compaq usually has a deal going for a computer/printer sale and with their awesome warranties, it's worth the money spent.