Thanks for your encouragement. I started talking very early, and my daughter was speaking in sentences by the time she was 14 mos. so this is new for me. We have the caterpillar, and lots of things that sing the abc song, etc. She actually sings along with the toys, as well as tv shows, and she loves to dance. The problem is she is mostly singing the songs with her own words and not the actual words. The two words we get out of her with any regularity are "Peeeeeese" and "Hewo!" (spoken in a huge voice). She is very social, loves to play with animals and other children when we go to the playground and the fact that she learns music but not words is frustrating. Again, thanks for your encouragement.
I could be wrong here, but I am thinking that with proper help from the parents and grandparents, she should be ok. Some children depending on the amount of time and energy put into teaching can be 3 before they are able to talk non-gibberish. What you can do is get a couple of learning toys (they have tons of them) and try to teach her speech.
I know that my niece and nephew have a caterpillar with a letter on each one of it's legs.
About a year ago I taught a 24 year old how to read, I started with the basics and moved on from there, I think that if you and the parents start at the basics, she should be just fine. If you give it an extremely dedicated try and you have no progress in a month, you could take her to a doctor and to a child psychologist.
Of course you are a great grandmother and you show concern, so I am not implying you or her parents have not tried to teach her already, and if you feel that you and or her parents have put enough into it already that she should be talking non gibberish, then you could go to the doctor now. It might save money and time if you try a little longer yourselves first.