I would maybe talk to her GP or have her talk to her GP about her sleep problems, etc. and maybe her GP knows of a geriatric therapist or other programs she might enjoy? Therapy for Geriatric and Aging Issues

My library system had a seniors/grandchild sort of program where the seniors read to or did projects with kids. The "Senior Corps" http://www.seniorcorps.gov/about/programs/sc.asp has programs for younger seniors mostly, but maybe there's an idea that might help? I would kill to have memoirs, etc. from my grandparents; I know they have books one can fill out now, making it easier for an older person, is there some "project" like that which would be truly useful she might be able and interested in doing?