Because the singular form of sister already ends in "ות" it's made plural in this unusual way. :)
Just to add to this, there are more examples to this rule, like חמות (mother in law) which in plural becomes חָמָיות
Brothers (אחים) could also be translated as siblings, but not sisters (אחיות). So the two together wouldn't be siblings.
Edit: (3/5/17) I would agree that "אחים ואחיות" could be translated as "siblings." I still think that "brothers and sisters" is the better translation, but "siblings" makes sense. I guess I must have felt differently eight months ago! ;) Although, with a lot of masculine plural pronouns it includes more than just the masculine. For instance, "ילדים" can mean both "boys" and "children." So it would makes sense to assume that "אחים" could mean both "brothers" and "siblings."
I agree that it is not the literal translation but if you say "siblings" it can definitely mean אחים ואחיות
You wouldn't expect אדום, צהוב, ירוק to accept "traffic light colors" , would you?
Since the word "siblings" as itself doesn't exist in Hebrew, the best translation to this word is אחים ואחיות, so I have to second Carmel on this
Since אחים implicitly implies both genders it would seem it qualifies as "siblings" on its own.