This is an interesting question, as, I too, wondered it when I first read the book. When it first comes up in chapter 34 we know the father was a "married man" and when the baby is born she looks like Steve "especially around the ears," but that is all. At this point in the story, it is a little strange that Steve/John neither objects nor seeks answers to this mysterious baby.
Later in the story, however, things become a little more clear. In chapter 47, Sissy and Steve finally marry legally. This is a turning point in their relationship, as well as a major characterization turning point in Steve. For one thing, he finally demands to be called his real name, by Sissy and the rest of the family. Also, Sissy opens to him with the truth of the baby. He, of course, knew all along that she didn't actually have the baby, and he doesn't seem to mind that it isn't hers. The final piece of evidence to suggest that the baby might actually be his is the fact that he is the one who told Sissy about Lucia, the baby's mother who was in trouble.
If Steve is the true father of the baby, it would make sense on many levels. It would make sense that he was cheating on Sissy at the beginning of their relationship because at that point, Sissy herself did not treat the relationship very seriously. It would also make sense why he is so forgiving of Sissy's life (and past mistakes). At the point that the two finally come together as a man and a wife, it marks a sense of maturity that both of them have finally achieved. Steve finally begins to act like a real man and Sissy finally respects him as one.
Whether Steve is the father of baby Sarah is never fully revealed, which means it is not entirely important. What is important is that Sissy receives atonement for her past by correcting (or taking on the burden) of someone else's similar mistake. It would only heighten the irony if that person also happened to be her husband.