Windows 7 has it's own Parental Controls and hopefully the Microsoft guidance below will help your grandparents understand them;
The best way to combat this though is, give your cousin a Limited User account. Set it up so he cannot install anything.
Also, when this new computer arrives, the first account that it opens with is the pre-installed "System Administrator" account. Password that, and then forget about it. From inside that account create a new Administrator account with a password, and the Limited account for your cousin. The new administrator account is for your grandparents, and the limited user account is for your cousin.
Make sure there is plenty of protection on the computer, eg a firewall, an anti-virus that updates itself and scans daily, and a couple of anti-malware scanners.
I hope that helps.
PS: Your grandparents must never forget their accounts passwords, and they should both be something your cousin cannot figure out, so no family names, no birth dates, anything like that.
My grandparents are constantly getting viruses on their current machine (WinXP), we know these viruses are coming from my cousins installing virus ridden games, etc. They will soon be upgrading to a new machine that has windows 7, is there anyway to set it up to have it so that they cant install programs? (Whether in Windows or another program)