Tonks,
This is a tricky one, my feelings are a bit conflicting.
Firstly, it's absolutely not your place to say anything to your daughter. It's her daughter and i'd be fearful of upsetting her with any unsolicited opinion.
Secondly, I don't think you're wrong in the opinion you hold. My daughter's pediatrician and dentist both advised it's best to get rid of the dummy before the babe turns 2. It interferes with mouth and tooth development. Waiting later just makes it hard to get rid of.
The child won't likely give it up easier on her own, especially if she uses it for sleep.
When my daughter was 20 months old I gathered them all up and threw them away. She was also only using them to fall asleep at nap and bedtime. We went through 3/4 days of rough falling asleep, then she was over it.
So, in my opinion, 5 is too old but it's not your place to say something. Just be on the lookout for your daughter to ask your advice. But don't make the decision for her when you watch the child.