I love the idea of a combo party, as long as you're not inviting your son's playgroup or anything. You want to keep the focus on both of them, not on a group of adorable 1 year olds.
The only idea that came to mind was, when it's time to have the cake, have each of them at opposing "heads" of the table. Your grandmother can have a large cake (to share with everyone), with lots of candles... and your son can have a small cake or cupcake, with a single candle. I would make sure that there are cameras faced in both directions, so again, they're sharing the spotlight.
When it comes to gifts, you might consider "sharing" the opening stage. ie your grandmother can help your son open gifts and read cards.
Gifts for someone of your grandmother's age can be difficult. Other than the obvious that you know she loves (favorite sweets, perfume, lotions, etc.) you might consider memorabilia-type stuff. A photo album that you put together with pictures from various stages of her life and the people she loves... An issue from an old magazine (life, ladies home journal, etc.) from either the year she was born or one of her teen or early twenty's years (she'd probably relate to the later ones more - maybe the year she turned 18 or 21). Often you can find these at half-price books or on ebay.
When my grandmother turned 80 last year, I put together a book of 80 years in review, with old ads, prices of what stuff cost 60, 70, 80 years ago, old photos of movie stars, what was invented over the decades, etc., along with photos of her and her family. I bound it with the plastic spiral stuff they do at Kinkos, and set a few copies out at her party. It was a real hit with the older generation, and a conversation starter between the generations.
Good luck!
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