Prudence’s response for those of you who can’t get the link to work:
But nothing did happen. You received a thoughtful gift that cost more time than money. That’s it! If someone gives you a present you don’t like, you smile and say, “Thanks, how thoughtful,” and then stash it in the back of your closet. You don’t ask your kid to complain to the gift-giver via backchannel. It’s fine if you like to give expensive presents—and can afford to do so—but that’s not the only way to show someone that you care. Even if you don’t like knitwear, your daughter-in-law spent countless hours over the course of a half-year working on something very detailed for you, and you say yourself it was a lovely bedspread. Whether she got the yarn with the gift card you gave her or spent her own money is beside the point; you’re acting as if she re-gifted something when that clearly wasn’t the case. Your daughter-in-law’s gift was thoughtful and intricate; yours was financially generous and relatively generic. There would be no reason to compare the two if you hadn’t insisted on doing so in the first place.
You are grown adults with plenty of money; if there’s something you want for yourself, go ahead and buy it—this kind of petty scorekeeping around gift-giving is barely excusable when little children do it. Writing her a letter to express “sadness” that her own parents didn’t teach her proper etiquette would be wildly inappropriate, out of line, and an unnecessary nuclear option. And it’s a guaranteed ticket to make sure you see and hear about your grandchildren way less than you do now. You still have time to salvage this relationship—don’t die on this hill. Let it go, apologize for your churlishness, and take yourself shopping if you want a pricey gift this year.