I second the wall shelves hanging from the rail. The Container Store has the fanciest Elfa shelving. I have the Home Depot knock off in my daughters room. The great part is I have a place to store clothes in the next size up and the small ones for donation. I got pretty boxes from IKEA.
When I first hung them in my daughter's room, she would just stare at all her toys the first week. It was funny, but she was proud of all her stuff and that she could see it.
Also if she likes to dress up, I hung a cork board with large tacks so necklaces and bracelets can be on display without getting tangled up. She loves jewelry, but could never find the necklace she wanted to wear.
IKEA has those handy rolling bins with lids. We have several of those that go under her shelves- dress up box, Barbie box, animals like horse dolls and Littlest Pet Shop stuff... My DD still has a play kitchen so I hung the shelves around that. We will be going through the toys soon and will probably rearrange the shelves again. (That's the beauty of the wall system.)
The shelves come in several colors so if you want a built in look just choose blending colors.
Another idea if you need some hidden storage and have a big closet... get the clothing rod doubler. It hangs from the top bar. I've switched warmer clothes to the top so my DD can grab her own clothes and dress her self. The great part is I have room for her laundry basket and some extra shelving. (We hide her puzzles and art supplies in the closet so her cousins aren't tempted by the markers, paints and PlayDoh.)
If you are on a budget, remember you can turn princess dresses into wall art. We used several 3M wall hooks so her dresses were visible and served as art. Now she has a giant butterfly kite up on one wall. (It was terrible for flying but makes a colorful display.)
Hope that helps. I'm so glad your granddaughter has you in her life. God bless you both.