Thank you all for your replies! You've brought up issues I didn't address in the OP, and much food for thought. I will try and address them now.
First, this party is in a small town. Think very small, no hotels within 35 miles small. There will be "local" people there driving over 100 miles one way to attend. The guest list is about 250 people. DH, DD and I live 750 miles from the venue. DIL and her parents are doing all the planning, invites ect...we are paying for half the party. We will be staying about 40 miles west of the venue, arriving the night before the party which will start the next evening at 6 pm. Grandma's nursing home is 35 miles east of the venue, so we would have to drive 75 miles each way if we were to take her there and return. I am not willing to do this, as we are the hosts and need to be there early and stay until the last dog dies. We are driving back home the morning after the party.
I haven't seen Grandma since Grandpa's funeral in Sept. 2011. She was mobile with a walker, needed assistance with the restroom and seemed a bit "out of it" but wasn't loud or beligerent at that time. Full disclosure is that I don't like her at all, but I am not the GOH for this party, DS and DIL are. Also I am not a witch and wouldn't invite the entire family except her especially when she is old, sick and feeble. I can and will be a grown-up about her presence (if she comes) and treat her with the same courtesy as any other guest.
I think that DH would like her there or is at least neutral about the idea, but he doesn't feel it is up to us to arrange and pay for transportation and a nursing person for her to attend. The logistics of those arrangements may not work with us being so far away.
This may be a moot point, as PP's have stated. Grandma may be confused enough that she won't realize if she is invited (or even going to a party) or not. I will take a PP's advice to ask DS how he feels, and I am going to bite the bullet and call FIL and ask about her mental state.
PS. FIL is a Pill.