Good advice so far as always. Just a couple of quick points to consider.
Will your Grandma be happy with just the LCD screen on the back to compose the pictures or would she be happier with the option of a viewfinder as well? Some older people aren't too comfortable holding the camera at arms length to set up the picture, some are. Viewfinder cameras are few and far between nowadays, a shame in my view but I suppose that's progress. Canon make a few with viewfinders, some in the A series already mentioned. Fujifilm make the S series that has an electronic viewfinder (essentially, an eyepiece with a mini screen behind it) as well as the rear LCD, though the LCD is a bit small.
The other point is I would definitely consider an Image Stabilised (IS) camera. Digital cameras are quite light, compared to the old film models and some folks (e.g. me!) find them a little prone to camera shake. IS really helps with this issue.