Check out Savingsforcollege.com for the basics on 529 accounts, and morningstar recently published their annual rankings of the different state plans.
Xerty, one way to avoid the financial aid implications of a grandparent 529 is for the grandparent to gift the money to the parent, who then puts the money into a 529 themselves. This of course creates new issues (the grandparent losses control of the funds, grandparent can not change the beneficiary to a different grandchild, the parent would receive any state tax deduction, etc) but is an option to consider depending on situation. .