When I was a kid, I was discouraged by nylon-string guitars. My fingers couldn't hold down the thick nylon strings (they kept popping out from underneath my fingers) and I didn't like the sound they produced. It didn't sound like the guitar-sound that my 1960s folk-idols were producing (on steel-string acoustic guitars), though I was too young to know why and no one explained the reason to me. Also, all I had access to was a cheap guitar with frets all out of position etc. Consequently, I didn't learn to play guitar until I was in college and got a steel-string starter guitar.

My advice to nosluap57: Find out what kind of guitar music your granddaughter likes before purchasing a guitar. If she likes the classical-guitar sound, go classical. If she prefers acoustic and has no objection to forming calluses on her fingers, find a small acoustic guitar and string it with extra-light strings or silk-and-steel-wound strings, perhaps tuned a whole-step down to lessen the tension until she builds up some finger strength and calluses. Or, as Richie suggests, she may prefer the electric guitar (in which case, you should consult her parents about how much noise they'll permit!)!

Or is it her dream to play a totally different instrument?

This "taste factor", plus the choice of a quality instrument itself (and PLEASE make sure you get a quality instrument!), may require more research than you have time to do a week before Christmas. But who says it has to be a Christmas present? You could give it for her 8th birthday... or as a special present any time of year! (Valentine's Day, perhaps?)