I am a Life Enrichment Manager for individuals with dementia/Alzheimer's Disease in Louisville, KY. Order an Alzheimer's Resource Kit for your grandmother from http://www.sehealth.org/foundation/SoutheastHEALTH.aspx?nd=400 . They are free due to donations and grants and come with Twiddles, which are amazing for keeping cold and hardworking hands busy and warm.
I made stationery on Tuesday with a resident using 1/2 cup of water, a teaspoon of sugar, dish soap, and food coloring. You blow bubbles with a straw in a bowl of these ingredients and have her place the paper/envelope in the bubbles. She can give these to loved ones as a gift and they can, in turn, write her letters, helping her feel less isolated.
She's a lucky lady to have a granddaughter trying to help her hands keep busy and happy.