I also think that grandparents should choose, but if both want to be called the same thing, there has to be a way to differentiate. In that case, that differentiation should be up to the individuals too. As a child we had a Granny and a Nana, and grandfathers were Grandad Firstname and Grandad Surname, oddly. I'd never considered that until now. Children just accept what they are told, usually.
I don't think it's disrespectful either way, other than that the other grandmother isn't listening to the OP when she asks for her wishes to be respected. Also, if surnames are used, it is the father's parents who usually have the same name as the grandchildren, which could be made into an issue if the maternal ones were insecure enough.
When the children are older you could gently correct them, though. 'No, silly, I'm Granny Smith, aren't I?' would do it (better if your actual name doesn't make you sound like an apple though
)