Yes, I agree that she is too small to breed but I wouldn't be too quick to spay such a tiny girl. I know you have an "intact" male so there is risk of an unwanted pregnancy, but please explore all options before making a decison. You could get a vascetomy for example on the male unless you still plan to use him as a stud dog w/another female. This procedure is much less invasive than a complete neutering and leaves the dog with the hormones necessary for a healthy life.
I am not a vet but I talked to quite a few and read articles about this issue and would encourage you to do the same to decide what is best for your baby.
Even a traditional neuter with removal of the testicles is an easier surgery than the full female spay. Your male is also larger so it may be better if he is the one to have the surgery.
Another alternative for your female is a tubal ligation or a partial spay where they do not remove all of the organs so that she cannot get pregnant but she still has the hormones she needs. This is less invasive and carries less risk to it according to what i have read.
If you decide to spay consider the laporoscopy or the laser surgery as those seem to be better for the dog and the recovery is faster. Also sevoflurene gas is the best anesthesia from what I hear.
Neutering is major surgery and the risks vs. the benefits must be weighed in every case for every dog. I am one who does not believe in "routine" neutering simply to "prevent over population". I believe that responsible yorkie owners can prevent unwanted pregnancies in most cases and avoid this painful surgery for their baby.
Good luck with your little ones..