There was a discussion recently on something...Ask an Atheist, I think. Respect the wishes of the dead. Would he have wanted those bible verses read?
I'm sure this is tough and frankly, in a real life situation, I think you should do what you think is right. That's it. In the end you have to feel good about your decision, so it's totally up to you.
In the abstract, however, I disagree with you here, Karyn, for two reasons.
1) Why, as a society, are we obsessed with the "wishes of the dead"? If a parent asks you do something which seems arbitrary you don't think about it. If they suddenly drop dead, the request takes on a totemic symbolism and suddenly the request has some deeper meaning which it didn't have before. If a person needs to go through with that as some kind of coping method, that's fine, but that's an individual
decision. I don't think there is any reason why the wishes of a person when dead should mean any more than their wishes when they're alive.
2) There's a bit of an implication that the only way 341gerbig can eulogize his grandfather is by reading these verses. Wouldn't it be more meaningful if he said something from his own heart? If those verses are particularly meaningful, I'm sure someone else can read it. Most of the things I remember most from funerals are stories and anecdotes from the person's lives, not the rote recitation of religious texts.
Moving back out of abstraction, however, my initial point remains. I'm sorry for your loss and ultimately, you should do what you think is best. Funeral and the like are not rational events where everything has to be logical or rationally thought out - they are emotional events for the people who are still alive. I hope it all goes well.