The hell you can't! If you don't show her how crap her taste in colours is, who will?
Nah, only kidding. We've all been given shi.. uh, crappy gifts by old ladies and didn't have the heart to read them their pedigree. I once got a pop CD (some pop rock band, one of those here today gone tomorrow types) from my nan that was forcing me to say things like, "Thanks... No, no, you don't need to take it back, etc, etc," but it was a shocking CD. The next year I think my nan just gave my mum some money and got me to pick out an present from her. The CD I got that year was slightly different.