I agree with Anna - Teachers go through training to deal with bullying and should no matter what age the children are, have a zero tolerance to bullying.
If you're not satisfied with the teacher's answer then take it to the principle, still not happy - demand a meeting with the parents and teachers present.
I'm sure the bully's parents would be absolutely mortified to find out what their baby has been doing (if they were decent parents) so it would be good to let them know so that they can put in some strategies to stop it.
**old wise woman here**
Caitlin went through a stage where she was hitting and biting other kids, she is much younger than Sarah, but I was still absolutely gutted that MY BABY would inflict harm on another person. We worked really hard at home and at her day care and we seem to be over the worst now