Well buying the cheapest XBOX 360 (4GB version) costs $199, then the Kinect costs $149 - so you'd pay $348 for that. The same thing in a bundle is $300. However, with the 4GB version you're probably going to end up buying the additional hard drive at some point - 4GB may sound big, but by the time you add save files, and then some of the games require large files you're really going to need the extra disk space! Thus the overall best value is the Microsoft - Xbox 360 250GB Console with Kinect bundle.
HOWEVER - and this is a big HOWEVER. What you have to consider is how much will yout grandkids actually use the Kinect- as you say the games are limited and while there will be more coming out eventually, you'll probably find some of the top games won't use Kinect anyway!
The other consideration is the Wii - the graphics are not as good, the controller perhaps isn't as good - but they still are pretty neat and there are a lot more games available!
Also you have the PS3 - with the Move and PSEye - which is like the Kinect combined with a Wii! You also get the Bluray player too!
Hmmm...I'm not really helping here - so what I advise, if you really like the Kinect, and you think the grandkids will use it a lot, then the bundle is the best way to go.........fell free to ask more questions!!!!