That is such a fun & thoughtful idea for a present! I'm sure she will greatly appreciate it!
I definitely like the "heritage book" idea. I LOVE Tim Holtz's distressing inks. The Walnut color is my favorite. I would probably use it everywhere on each page!
To get facts about life while your grandma was growing up, I would just google the year and what you want to know (ie: 1920 food prices, etc.). I'm sure there are lots of resources on the internet that could help--maybe even find pictures of places she lived at the time that you don't have.
This website also has tons of resources for quotes and poems, and such. You can also search through the gallery for page ideas. Try searching "Heritage" in the gallery. I frequently use it to get ideas for my books.
An easy way to organize the book is chronologically. Group the pictures based on the year / age and then pick which ones you want to use for the pages.
My advice for the pages is to pick whatever pictures you want for a page and let them determine how you decorate the page, while keeping the focus on the pictures. The pages don't have to be fancy and expensive to be beautiful.
Another fun idea would be to see if you can slyly get stories from her about her childhood and then you can include them in the book. I'm sure your entire family would love and appreciate it.
Best of luck. I'm sure it will be beautiful and your grandmother will love it! And feel free to upload pictures of it to this site so you can show off your mad new skills!