Squeaky, but this is her GRANDCHILD FFS!
Oh, I get it. 60 right? Oh the 'i'm too young to be a grandmother' shame on her line. I HATE that more than this snubbing of her own child's baby and his wife.
There is no way on EARTH my mother would not have my DS as part of her celebrations, never. That is what family is, it's about generations, it's about passing on the name/bloodline. Taking the little one to FAO Schwartz and watching her face light up, taking her for a spin on Toys R Us wheel, and also fine dining, river trips, Central Park etv
This trip is not about the child, it's about a celebration of a woman's 60th birthday, she wants to invite her family. Of course! HOWEVER, Her family, up until this event, included her son and his daughter, and naturally the woman that bore him that daughter 
This woman should be ashamed of herself, to be so exclusive, and DH ought to have said something right there and then and not mentioned it/accepted any invitation until the event was more inclusive of his family.
No wonder OP is mortally offended, she has every bloody right to be.