If you like that case, and don't plan on heavy-duty gaming with that strong cpu, then that case will work fine.
You can probably start with onboard graphics if the grandkids are young. To show you what's "required" for your main purpose, no graphics card is needed and these (plus a quality 300W-400W psu) will more than suffice:
ASUS P5N7A-VM LGA 775 NVIDIA GeForce 9300/nForce 730i HDMI Micro ATX Intel Motherboard - Retail $119
http://www.newegg.com/Product/Prod [...] 6813131348
Intel Pentium E6300 Wolfdale 2.8GHz 2MB L2 Cache LGA 775 65W Dual-Core Processor - Retail $84
http://www.newegg.com/Product/Prod [...] 6819116091
I don't do AMD configurations, but I'd guess you can do an adequate AMD mobo and cpu for $50 or so less.
If you want to go i860, you need not use more than a $110 mobo plus the 860 cpu, a 400W-500W psu and this video card:
http://www.newegg.com/Product/Prod [...] -_-Product
If you want to prepare for "older" grandkids and have a PC that can play more demanding games, all you would need is a better vid card at that time. If so, please tell me the resolution of the screen you intend to use, and I can give you an example in today's tech (new generation of vid cards coming next month or so).