Last year for both my in-laws I collected digital pictures of all their grandchildren (both my kids, and my SIL's) and uploaded them to Snapfish. Then I made a very high quality wall calendar using those pictures. The Snapfish calendars are really quite fantastic. You can put multiple pictures on each month, as well as pictures in the square for significant days. So, I have pics of my in-laws with their grandkids scattered throughout the calendar, as well as pics of just the kids. For each kid's birthday I put a picture taken at the hospital. For wedding anniversaries I put little wedding pics. For special holidays like Easter and Halloween I have pics of the kids doing egg hunts or in their costumes.
I also made the calendar for my own parents and grandmother, as well as for all my siblings. I can't tell you how much they all raved about them. My grandmother is always very difficult to shop for, as she has very refined tastes, lives in a small assisted-living apartment, and has no room for little trinkets and knick-knacks. She LOVED it and has been hinting all this year that she is looking forward to her Christmas gift this year.
To top it all off, they were only like $28 for a very high quality calendar.
This will become my standard gift for parents, in-laws and grandparents.