My grandmother wants a digital camera. She'd probably just get the photos printed from the memory card using one of those printing terminals. Not concerned about how much storage is in memory card, as it can be upgraded. Doesn't have to have an overly simplified UI, as long as it's not overly unintuitive. Cheap is good, just not Nasty too.

I'd buy a cheap Canon 4MP and not more. Pictures will always be printed in 4x6 so more tha 4MP will not make any differences.