I agree with Jude that in my mind, an uptight grandmother - one that wouldn't be caught dead crawling around on the floor with her grandchildren or playing Chutes and Ladders - would insist on being called "Grandmother" with or without a last name.
However, if the grandmother has some kind of hang-up about her age and actually believing she is far too young to even be a grandmother, I agree with SQD of perhaps going with something along the lines of a "Mimi".
If she's really an old biddy, what if the grandchildren are so very intimidated they just call her "ma'am"?
My two cents <g>.
Lynn