I agree with the first poster....it seems unlikely this is the result of a serious mental illness and it's not unusual for kids to develop imaginary friends as way of coping with their insercurities, fears, etc. What do her parents make of this situation? I'd keep an eye on it, but don't jump to conclusions.
The 2nd poster is right in that a first episode psychosis in illnesses such as schizophrenia can often be brought on by traumatic events. The difference here is that her daughter is 21 yrs. old and your niece is only 8. Age on onset for schizophrenia is generally late teens or early 20's. In rare cases (very rare) schizophrenics can have their first psychotic episode in early adolescents. Since your niece is only 8 is another reason why I would not worry too much about it.
Best of luck.
I also have a daughter who hear voices and she started hearing voices at the age of 21 right after the fact that her boyfriend was shot and killed. I also read that after something that happens likes a real bad experiences that is when the schizophrenia comes out. My daughter has problems and she deal with it day by day but the only thing I would like to say please do not listen to just everyone because they will try and tell you so many thing to do. but the one thing that I fine that I can do for my daughter is be their when she needs me to. It is so upsetting to me when I see her hurting it truly is hurting feeling when you know that you can not ease their pain that they are having. because my daughter wants so bad to get a job like the other young girls but she cannot. and she wants so much to have a boyfriend but cannot due to the fact of hearing voices. so her life is being home. and her father is not in her life because he is always in the streets doing other thing.
Thats incredably interesting. It could be a number of things, given the level of detail your niece has given about the 'imaginary friends' she sees in her head as well as her age, to my untrained mind its unlikely to be a serious mental illness such as Schizophrenia due to the imagery associated with the 'friends'. Children deal with trauma in different ways, one of which is to create imaginary friends and then associate thier worries and fears with these 'friends', so the monsters in the closet is a strong indicator that it is a problem associated with trauma management, the 'spiders under the covers' are most probably an attention seeking ploy skillfully woven through a third party (the imaginary friends). The divorce was clearly not straight forward (they never are!). You should explore the mental health implications, but what you really need is a child pyschologist to assess your niece. More information on schizophrenia (and other disorders) can be found here http://reintegration.com/ but to my mind it is trauma related. Interesting she has chosen twin boys with such distinguishable characteristics, has she ever been to school with twin boys of this description? Has she ever had twins as friends? If not is there a history to your residence? (I am obviously speculating wildly about pychic phenomina!)