I love the idea of scrapbooking old photos (of when they were young, their children were young). You could also make those photos into a DVD movie, complete with appropriate music for the era and narration of family memories.
One year, I bought everyone hand-crafted Christmas ornaments our local hospice was selling (an organization close to my heart as an Oncology nurse). They were beautiful and most of the money went to benefit the local hospice chapter. They have turned out to be like family heirlooms. Look into these types of organizations. Most have elderly volunteers that make crafts to sell ( American Heart Association, Cancer society, etc......senior citizen centers too). Who knows, it might spark some interest and they might choose to volunteer, and make new friends.
My grandmother always loved yarn for her crocheting and knitting. Kept her stocked for the whole year. Maybe TV series DVD's of shows they really used to enjoy (Golden girls, Matlock, Little house, Waltons).