L.,
That sounds like it could be my mother. She was so thrilled to become a Grandmother that she went completely overboard with the gifts and the treats (and she is in a position finanically to be VERY generous if she chooses to be) There have been times when it actually feels like I am in a competition with her when it comes to holidays and birthdays and sometimes no occasion at all, there are times when it seems as if she justs wants to outdo us.
I now have 5 children and have mellowed a bit. This is the way things are and apart from putting my foot down about sweets (at my house- at her house its harder). Although now that I've gotten to the point of being resigned to the situation I have to say its come back to bite her more than a couple of times. I have gotten to the point of, not encouraging the children to get their "things" from her, I don't discourage it either -I get so tired of being the bad guy in this. My oldest is 13 yrs and my youngest is 2 yrs. So many times they see her and the first thing out of thier mouth is "what do you have for me?" or the last thing they say when they leave or she leaves is a list of what they want, she is the only one they do this to. They don't act this way with us or any of thier friends, or our friends.
Yes it is a Grandmas job to spoil children and enjoy them, everything is better in moderation and sometimes when we do things in excess we ruin it, mostly for ourselves. When my children act this way with her I think it makes her sad, I have tried to talk to her about it over and over for many years, and have come to the conclusion that with our actions there are consequences. She refuses to change or reign in on the spending and the gifts, so in fact she has created the situation. I feel like as parents all we can do here is "damage control."
I this hasn't had much helpful advice for you, but know that your not the only one dealing with this, but just know that someday she may regret that her grandchildren see "things and stuff" when they look at her, not a person. You may try to approach her that way, and maybe she will listen. Good luck.