Again, from what they said, they do have more. But they don't necessarily need it. If the child doesn't want to conform to the school's dress code, and the grandparents don't have the stones to insist on it---"How can we do that?"---then she needs to find another school.
It's not a personal attack, though the grandparents chose to characterize it as such. Unless you think all dress code and other disciplinary infractions should be ignored because the students are all little girls and boys.
I would have to agree that the child should not attend this school any longer. All I can say for sure is that it is not a good fit for her. Time will tell if their concerns are founded or not.