Find outlets for them to express their grief. Dedicate the yearbook to the student who passed away. Get a student organization to sponsor a scholarship in the student's memory. Put up a bulletin board to memorialize the student. You don't want the grief to be drug out, but you don't want it building up either.
Death is common but never easy.
We had several students at my high school die in car accidents and one die while on a waiting list for bone marrow transplants. I think what the administration did was appropriate and helpful. Announcements were made over the PA and a moment of silence was observed. Students were told where they could go to talk to someone if they needed. Teachers also helped individually by holding discussions or moments of silence in class.