At no point in the OP does it specify whether the request for cash for the grandkids was unsolicited. We've all assumed it was - not necessarily correctly. My DM and MIL always ask what DS wants. It's a polite query to make sure they are not duplicating or lumbering us with unwanted items.
Agree with a lot of what SGB says.
Think it's a complicated mishmash of different cultural, societal and generational etiquette. What's depressing is the most honest and simplest answer to the gift-giving query (money) is considered the most bad taste. What babybarrister says about our weird English hangups!
I also think a lot of us (me included) have been brainwashed by advertising and consumerisation of Christmas to believe that 25th December should be one long day of sitting under the tree unwrapping with our faces lit up at every useless gorgeous trinket.
There is a huge marketing investment in getting us to buy consumer goods, many of which will languish in dusty cupboards or gift vouchers (many of which will never be spent in full - giving the retailer a nice bonus) to keep the Christmas 'magic'.
FWIW apart from the very deprived,
many children in this country will have a considerable sack of goodies to open regardless of whether their parents ask for money for their CTF or financial contributions towards a genuinely wanted expensive item that they otherwise couldn't afford. And to be honest, wouldn't it save a lot of wasted wrapping paper, landfill, energy and the earth's resources to give money towards wanted items or long term goals e.g. university / flat deposit?
If you like to buy lovely things and gifts - carry on buying them but don't expect everyone else to obey your rules of good taste. If someone solicits an opinion on what they should get for a gift, why shouldn't it be answered honestly? There is still no obligation to get it 
My DS has just had a birthday and he got a mixture of money in his CTF, cash (which we spent on clothes for him as we are hard up at the moment) and various clothes, books & toys. We took him to the toy department* and got him to choose his present from us - so it would be something treasured and wanted.
YABVU.
*Not a symptom of our spoilt grasping generation either - my mum in the 1950s used to get taken to Hamleys every Christmas to choose her present!
