Agree that you can talk about death quite frankly with young children - and avoid saying 'grandad fell asleep' as that can worry them about sleeping.
We took our DD (then 5) to her grandmother's funeral - but to the memorial bit, not the cremation. I think sometimes we worry that DC will be upset at funerals because we know we will be showing emotion. But that wasn't a problem and it was lovely for her (and her younger brother) to be there as part of the family coming together to mourn and celebrate a life well lived.
DH broke it to DD about Gran. He explained that she had lived a lovely life and we loved her very much but she was old and had to go and, while we would all miss her, this was the way of things. Lots of emphasis on the fact it didn't hurt (DD was quite concerned about this - she knows her aunt - DH's sister - died young because she was ill and we wanted to get across the sense that while it was terrible to lose a grandparent it was more within the natural order). DD was quite matter of fact. I think young children are - perhaps because they can't quite grasp the concept of it?
So sorry to hear the news, I haven't much experience but would advise no to the funeral at his age.. I'd also say that you should tell him asap. be honest and age appropriate.tell him that you have some sad news so that he knows its ok to be sad, but limit details . Sorry that all sound useless, no help at all.
DW's Dad passed away last night. She has been with her mum during his short spell in hospital with our DD (2) while I have stayed with DS (5) with the help of my mum (I'm mobility impaired, but work full time from home). Here's our question: DS loved his grandad, and is a very sensitive child who has already been through a severe trauma, namely my own near death and long hospital stay as a result of a road accident. We've kept him here because seeing me on a bed connected to a mass of tubes was very upsetting to him first time around and we didn't want his last memory of his fit and highly active grandad to be like that. Advice sought now on, how we break it to him? and crucially, do we take him to the funeral (cremation, maybe disturbing, fire and all that) or does he stay here? I'm at a loss to know what is best and so is DW.