Dear Mimom,
Get the fabric amt. that the pattern calls for. You never know, but we have all been known to make a miss cut, etc.. Also if this had been someone paying you (from off the street), and they wanted to bring you the fabric (they would need to bring you the amt. on the pattern). The extra fabric is part of the payment we get for our hard work. And the fact that you are NOT being paid, still doesn't change the fact that you should still get something for all of your hard work.
As far as the quilt going missing. Be sure to take pictures of the quilt with your DH grandmother. Be sure to post a picture in the grandmothers room. This way anyone who goes into the grandmothers room, will know that the family knows what grandma has. Also be sure to put NAME on it!!!
Good luck!