Grandma was very hurt that he was so disappointed in her gift, but my son seemed oblivious to her feelings. With the holidays approaching, I don't want a repeat performance.
Young children are spontaneous and unguarded in expressing what they feel and think.
They have not yet learned social graces and they are still very focused on their own feelings much of the time. Nevertheless, your son is at a good age for you to begin to help him develop the skills of receiving gifts with grace, learning at the same time to have more understanding of other people's feelings. I'd suggest that you start by talking with him about what happened with the birthday gift, acknowledging that you know he was disappointed but that you want him to learn a better way to deal with that kind of situation in the future. Ask him to imagine how he'd feel if he gave someone a present and they responded that way. Ask him how he thinks Grandma felt when she saw how disappointed he was.