This is just a quick example of what it might look like- I just traced my daughter's hand print and colored it in, and it's not framed- yours will look much prettier!
I made these a few years ago for all 3 sets of our parents (all the kids' grandparents). I simply used finger paints to get the kids' hand prints on a sheet of white cardstock, then I printed out this poem on another piece of cardstock. I matted the poem and the hand print side by side on a darker color piece of cardstock along with the child's name, date, and age, then purchased a $5 frame from Wal-Mart and framed the whole thing. The grandparents all loved them, and still have them hanging in their homes.
You can get more creative with this if you want, and use patterned paper and embellishments to dress it up. My main recommendation is to actually brush the paint on the kids' fingers (rather than letting them dip their hands in the paint) because it doesn't waste as much paint and it makes for a much cleaner handprint.
And here's a bonus art project for the kids if you want another idea for a fun grandparents' gift- last year I bought an 8x10 photo mat, and I had the kids paint it however they wanted. While they were painting, I took a photo of them doing it. Then I had the photo blown up to an 8x10 size and used the mat they painted to frame it. It really captured the moment, not only with the finished product but with the photo showing the fun they had creating it.
Only 2 Days of Christmas left...