157 cm certainly isn't all that tiny in relation to women's bikes (even road bikes). I'm 159 cm, perhaps not even quite that, and my size is S womens or XS mens. In fact my flatbar road bike which is S womens turned out to be too small for me!
+1 to casual rides having a wide range of definition. Even group rides on bike paths doesn't necessarily = slow, by any means! If she feels there is likely to be any issue with keeping up with groups, and if she wants to stick with buying just one bike for the long term, and if most of her riding will be on sealed I'd suggest the safest way to go is to buy a road bike, even if its a cheap, old, second hand one, as long as it works properly. (BUT a word of caution: if it's a drop-bar, make sure it has the modern hoods that she can reach the brakes from, unless by any chance she is happy with the idea of always riding in the drops... AND don't rely on the old "suicide levers" as a substitute!) Wider tyres are an option if some of her riding will be on unsealed surfaces.
Re the type of bikes of other people she will be riding with: if it is a mixture of bike types and she is unsure of their level of bike fitness in relation to her own, it is best at least not to go for the slowest bike type in the group, because the people on those bikes could be extremely strong and fit!