I'm sorry for your loss.
Have you talked about this with your children? I think personally it is important not to disallow either of them to come to the funeral: if your son attends but your daughter doesn't, she may feel left out of something that is an important day in the lives of many members of your family, and a day that very often binds families closer together. They may have been close to your granddad or maybe not, but funerals are a way and an opportunity for saying goodbye and learning how to cope with the concept and, frankly, the reality of death and mourning. People of all ages can be distressed at funerals but there is nothing wrong with this. Even being a year older, a child might feel very differently on such a thing. Also seeing how many people loved the deceased is a good thing - reminding us that people are special to many others, in ways we might not have known about.
For us, we have always taken our children to funerals, even when very small and babies: people were cheered to see them there, to see a future generation of the family present, and of course we ensured that they behaved in the service (but as they are used to church, they were used to the routine). I do know that as an adult, the services I was unable to attend through circumstances, have left me bitterly regretting not being there, when all the rest of the family could make it.
Our children have cried at funerals of family members and of church members; and been very distressed at the funeral of a school friend who died, a possible suicide. But I have sat with them and talked about it, provided plenty of tissues and shoulders and cried myself. Without knowing the details of your funeral arrangements, I couldn't make any suggestions as to other helpful things. But some people take a little photo of the person into the service so they can think about happy memories of them (or this is sometimes on a service sheet), and sometimes if there is a burial, people bring little flowers that they can put on the coffin or in the ground.
It's a hard thing to talk about with children. I wish you all the best.