I was talking to the owner of our local toyshop last week and she was saying that it's not just been Mattel recalling toys, although they are the firm that hit the headlines. Two or three other companies have recalled toys when they realised that they had been produced at the same factories as the Mattel ones. It may be that the toys concerned did not have high quantities of lead in the paint and the recalls were just a precaution (in which case, good for the companies concerned), but it also raises the question - are there other firms using those factories who are just keeping quiet and hoping that they aren't affected.
As for grandparents, sadly they often seem to think that more is better. My wife's mother is like this and used to buy her grandchildren (they were my wife's sister's children; we don't have any) enormous quantities of cheap stuff, and often, the kids played more with the wrapping and boxes than what was inside!