I wouldn't address it at all.
I have the same situation as you. I have THE best in-laws EVER. They are wonderful people and GREAT grandparents! They too are overly generous. When it was only my stepsons in the beginning of my relationship with my husband I noticed and thought to myself 'Wow! You have got to be kidding me' but I let it go. Then when I had my own kids, I was feeling the same as you and contemplated saying something but decided it was better to keep my mouth shut. They worked hard all their lives, worked up until retirement age and have earned the right to spend their $money$ the way they see fit. They have every right to spoil their grandchildren, if they want. It brings them joy. I would never do or say something to make them feel wrong or not appreciated for what they give.
I have learned to love it. The way I look at it now is that it is less $money$ husband and I have to spend...and that is a good thing...b/c we can work hard and save our money and one day have it to spoil our grandchildren with.
My in-laws have bought bikes, countless Nintendo DS's, computers, laptops, first cars, bedroom furniture, even put in Pergo floors in my stepsons' bedroom b/c MIL thought it would be better...as well as countless other things! My MIL loves to buy school clothes and school shoes and good winter jackets and ski/snowboarding lessons...and take us all on wicked family vacations every summer, they just truly enjoy giving. I would never take that away from them, never. They have even set up and paid for all the kids' college!!! I just let them have at it and be grateful! And try to teach my children to be thankful and grateful and they know the difference between what Mom & Dad would buy for them and what The Grans would get for them!
My MIL has THE most fabulous taste and I am grateful for everything she buys us. You should see my kitchen cupboards, I have all the best pots and pans and knives.... and (my favorite gift yet) wonderfully expensive bath towels that I would NEVER buy for myself...but boy do I love them!
So as someone who is in your same boat, I say embrace it for what it is...it won't last forever...and do your best to keep your children grounded in reality and teach them to appreciate their Grandparents for the loving and giving people that they are!!
The way we handle who buys what is we communicate. My MIL calls me around b-day and Christmas and we discuss what kids want what and who is going to by what..so there is never any duplicate gifts. Problem solved.
I have learned, by being on this board, that I am truly blessed in the in-laws and grandparents department and I am in NO WAY going to kick a gift horse in the mouth, as they say!