Hi there. Personalization was mentioned for the gifts. Do you have an embroidery machine, by chance, or know someone who does? This would be a great way to personalize a tote bag, bookmark, coasters (a set of raggedy coasters makes a nice gift, and they are quick! My 3rd grade teacher still teaches at my DD's Elementary school, and I just made her a set of raggedy coasters in October for her birthday! I also added a little candle), placemats, or whatever it is you decide to go with.
If that is not an option, you could use the permanet fabric pens to create the teachers' names and your grandchildren's names and possibly some artwork by the kids. :D
Another really nice idea is a quilt mini mini...They are something I made up. I didn't have time for a large project and wanted to do different themes on each, so I made 3 very small, quilted wall-hangings. They were about 12 x 12 (inches) finished size. They were my first works and far from great. I did the centers with my embroidery machine, but you could have the kids do a design with the markers or make a mini out of a single block. ?? Or do a signature block for the center...or a handprint...
anything creative, even a printed picture on fabric of the child, or a plastic pocket for a real picture or attach ribbons to secure each corner of a picure with???... Just a simple ribbon attached to each top corner could serve as a hanger.
Why don't you ask your Grandaughters which things they are interested in the most? Most of all, have fun!