I agree, charge less for your first wedding cake...but keep it simplier and at least cover the cost of your materials! I am not even sure she is doing that...
I'm in complete agreement.
I was going to do my cousin's wedding cake (note how I said WAS). She wanted a 4-tier square cake w/ fondant that would serve 200-ish. I quoted her $600, which I felt was on the low side, but still fair and reflected my personal skill level.
I get an email back from her that basically said "I'm so sorry, but my parents just don't have that kind of money right now.", which I found hilarious because:
1. I know her parents have that kind of money.
2. I can't imagine who she's going to find to do the same cake for a lower price.
That's family for ya! 
Thankfully there are no hard feelings, plus now I can just sit back & enjoy myself at the wedding.
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Switching gears a bit...you mentioned you were a hobby baker. Before you get too engrossed in the planning, you need to find out where she is having her reception and make sure you aren't going to need a business permit/license/etc. in order to deliver the cake!!
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