I am sorry to hear about your grandmother. My grandmother passed when my daughter was three also. I really do not think a child of that age can grasp the concept of dying and heaven. We kept it very simple, and then as she's gotten older we expand on it. We just told her that GG went to heaven. For a year, that was good enough until she started asking if we could go visit her in heaven. She was older, so I could explain more. I just hope you can find a way, with your own religious beliefs, to keep it simple and satisfactory for your daughter. I know around the age of 4, a lot of kids get a huge fear of death, so if she knows too much she may develop a fear that you or your husband are going to die too.
For my sister and I (she had a 4 year old at the time of our grandmother's death) we chose to not take them to the funeral. We felt it was not appropriate to take a small child even thought it was close family. We just thought that we wanted all the memories that our daughters had of their GG to be good, not scary. And, I do think there is a chance your child could be scared at a funeral. My sister took her daughter to the visitation, though, because the atmosphere was very calm and more informal. That's just something to think about as your prepare for some tough days ahead.
P.S. There is a wonderful poem that was read at my grandmother's funeral that was really fitting since she died on 12/12. For Christmas, I found an ornament that could hold a piece of paper, and put the poem on it. I gave it to my mom and said it was from grandma. It gave us all so much comfort through the first holiday without her. I hope it will for you and your family as well:
I'm Spending Christmas with Jesus Christ this Year
I see the countless Christmas trees,
Around the world below.
With tiny lights, like heaven's stars,
Reflecting on the snow.
The sight is so spectacular,
Please wipe away that tear.
For I'm spending Christmas,
With Jesus Christ this year.
I hear the many Christmas songs,
That people hold so dear.
But the sounds of music can't compare,
With the Christmas choir up here.
For I have no words to tell you,
The joy their voices bring.
For it is beyond description,
To hear the angels sing.
I can't tell you of the splendor,
Or the peace here in this place.
Can you just imagine Christmas,
With our Savior, face to face?
I'll ask Him to light your spirit,
As I tell Him of your love.
So then pray one for another,
As I lift your eyes above.
Please let your hearts be joyful,
And let your spirit sing.
For I'm Spending Christmas in Heaven,
And I'm walking with the King.
~© Wanda Bencke ~