How old are your grandparents?
60's or 80's?
It matters..
I'd think a simple "tank" for them.
Lian Li PC60 for some class
workstation quality motherboard..
Conroe 6600
2x1 gig ram..
mid range vid
PCP+C 610w(overkill but overkill in PSU's is good IMO)
2 good SATA drives in raid1 and buy a thrid for a backup when one fails
300 gig storage drive for data.
I think you can build that for the money you have to work with.
Good Luck..Make it special for them. You won't have them forever.