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Penelope, Iris, Beatrice and Matilda are stunning as sisters! I love Penelope. Slightly weird and awkward, but in a charming way. I prefer Penny as a nickname– it's more intuitive, I like the sound of it a bit better, it's totally sweet and simple, and I've been digging Penny since I saw Dr. Horrible.

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For the middle name, I'd probably opt for something short and clunky, rather than something frilly, because Penelope is quite long and I'd personally want to emphasise its clunkiness. Some ideas:

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Penelope Maud
Penelope Esther
Penelope Joan
Penelope Agnes
Penelope Wren
Penelope Vera
Penelope Sibyl
Penelope Linnet
Penelope Finch
Penelope Oda
Penelope Olga
Penelope Marni
Penelope Bridget
Penelope Gytha
Penelope Joyce
Penelope Gladys
Penelope Edna
Penelope Cora

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Any you like?