Okay, here are a few ideas off the cuff. First, you could do a scrapbook. You could have each kid draw a picture of themself and grandpa together or their favorite thing to do/about grandpa. Then at the beginning of the scrapbook you could do a through the years montage starting with your dad as a baby and including pictures of the high points in his life (birthdays, wedding, graduation, other important events in his life). Then you could follow it with pictures of each of his kids. Some of your dad and each of his kid but also some of each kid alone on that page, too. You could also include a letter from each of his children telling them what his influence and support have meant to them or sharing their favorite memories of times with your dad. If your mom is still alive, I would have her write a letter and include a picture of them on their wedding and pictures of the two of them throughout their life together. If she is no longer with you, you could do a section honoring her. If they split, you could skip that section. I would put the spouse in before the children. After the children, I would put in a section from the grandchildren. I would make each grandchild's section at least two pages (facing each other) long. On the first page, I would put the picture that the grandchild made for your dad. On the opposite page, I would put the child's handprint. I would surround each with pictures of the grandchild. Some with your dad and some without. If there are others that would like to include special memories they had of your dad (siblings or good friends, for instance), I would reserve the end of the book for them. I would ask each for a letter and a favorite photo or two of themselves with your dad. (Alternatively, for the photoes you could ask for one of the person writing the note and if they have one together with your dad or a favorite photo of your dad.) I would label the last remaining pages, "Dad's Favorite Memories" and leave a spot for him to add photos or notes. On the very last page or inside the back cover, I would write him a note as to why you wanted to do this for him and also include the date.
A second project, is a photo collage. You could give the kids small pieces of paper to draw small pictures on and interweave them with cropped photos and put them all into a large frame.
A third idea, is to go to a craft store and buy a photo quilt. This is a quilt that comes with special iron-on paper and has specific white squares. You can then do a special photo montage/picture for each of the white squares. You can print them on your computer and iron them onto the quilt. Just remember to invert the picture if you have print on it so that when you iron it onto the quilt it will read correctly. I'm sure the kit will explain that though.
I hope these ideas help to spark one that works for you. Good luck and with your dad a very happy birthday.