I ask our friends to remove my daughter from FB. We go to big events for our hobby and routinely I have to ask people to please remove my child from their event photos. People have asked to take her picture and I say no. I don't care if they think I'm rude. Even though I am on FB, my husband is not, and my toddler is not. Even her big brother and sister know to keep DD off FB.
Nevermind all the other things I dislike about FB, those that hold the keys are always pushing for less privacy and changing things. FB does not respect privacy and anyone who thinks otherwise hasn't been paying attention. Kids may not care, but *I* do. I don't put my high school, my work, my real email address. It's a tool but it has limits.
We live in a digital age, but just like the kids of celebs deserve a little privacy (even though they don't always get it), average people can choose to limit their children's exposure online. It's also different if my child is in a static product, like a picture in her Nana's wallet, versus being online for anyone to see, view, distribute...comparing Grandma's fridge to the whole internet is apples and grapefruit.
I think even if she used the pics in a Christmas card, she should ask your permission first. Parents first, grandparents second. My MIL doesn't make the rules for my child.