If you have a wii, a great game is animal crossing wild world. You guys can create a town together. Design your own house, participate in holidays, and it has cute animals in it. It's a social game. you can leave him messages on the towns message board send him mail in the game. It's really cute. My nephew, whom I raised for many years is 8, and we communicate through animal crossing all the time.
Skype is a great idea, because you two can see each other. It's like being there with him and if he can see you he may be more likely to talk with you.
A great thing that my husband does with his sons (4) who live across country is care packages. My husband sends them things like coloring pages they can color and send back to him. Cards, books, puzzles, pictures, small toys, clothes, DVD's, ect. Post cards addressed to your grandson with cool pictures on them will make him excited about the mail. It's great for kids self esteem to get old fashion snail mail.