My step-step-grandad (My step-dad's step-dad) is the worst of it, calling all darker people 'darkies' etc...don't get him started on the post office -_- But I don't blame him, he's really old and was bought up in the country. Besides I doubt he really means it in a nasty way.
My great gran (or great, great? One of those) was funny. She passed away before I was born, but she was quite close to my mum, and one day they out shopping, she was really quite senile by then. She used to live in India when she was quite young where should would be waited on by Indian servants etc, and they went in to a little corner shop, where she asked the shopkeeper where his master was! My mum was mortified and apologised to the shopkeeper, but even they recognised she didn't mean any harm, it was just old age. I think old people just come from a different time, and I can't help but be more leniant with them.