Call and tell them that the plans have changed and you will have to cancel the Christmas Eve get together with them, because your job doesn't allow you enough time to prepare. Apologize profusely, and vaguely say that perhaps you can get together another time, when things aren't so hectic. Since you left things tentative in the first place, it shouldn't be that big of a deal to get out of it! Be sure to slip in the "with them" though... so you aren't lying!
You have every right to want to see your granddaughter, by herself at Christmas, and since they will see her on Christmas Day, it is only fair!
By the way, who wants a Scrooge like the paternal Inlaw around to ruin everyone's good time, anyway?
....and.... if your DH doesn't want them there, it is best to cancel... since NO ONE will be happy otherwise.
Don't give into it... you deserve to have the kind of Christmas Eve that you want... so take a deep breath and pick up the phone and get it overwith... you will feel much better once you do!
Hope everything works out for you, and you have a wonderful Christmas Eve with your Granddaughter!