She may be old and revered, but she's behaving like a rude, bacon-fed knave right now. I don't know what to tell you other than to take the baby away from her when she says something like that and tell her you're sorry she's disappointed in a perfectly beautiful baby. (Congratulations, by the way. I'm thrilled for you!)
When I had my daughter and felt well enough to walk around a little, my mom took me an early morning for a tour of the maternity ward. By coincidence, we happened upon a family I knew very well from high school. They had three lovely sons, who were handsome and smart and kind boys. But the family only seemed to produce boys! When the oldest son's wife went in for her ultrasound and heard she was having a girl, the whole family was over-joyed. The grandparents offered to decorate the nursery and helped the mother pick out pink paint, princess themed bedding and curtains, dollies, the works. The little closet was chock-full of frilly dresses and little Mary Jane shoes.
And now, the wife was in labor and the whole family was gathered in the waiting room with pink roses, pink balloons, pink teddy bears. We stopped to talk and they congratulated me on my baby girl. While we were standing there, the new dad came out and announced that they'd had a baby boy. The doctor assured the family that the baby was perfectly healthy, and that ultrasounds can be wrong sometimes. Some of them were a little upset, but the grandpa just stood up and said, "Well, I think we need to meet him... and then go home to repaint the nursery before he comes home."
And that was that.
The family loves their now-much-bigger baby boy and the numerous grandsons they've had since. They've never said one word in front of me about being disappointed in their completely sweet grandsons. (They have one granddaughter, who rules with a tiny, but fair, iron fist.)
Adjustment. They did it right.