The child support arrearage issue in AZ is a little confusing due to a chance in the laws back in 2006. However, I think this applies to you.
The statute of limitations for collection of child support was eliminated effective September 21, 2006. In cases filed prior to September 21, 2006 where the youngest child had emancipated and three years have passed: If a final judgment on arrears was not obtained, then the arrears cannot be collected. If a final judgment on arrears was obtained prior to that date, then the arrears set forth in that judgment can be collected. If a judgment was obtained for any time period within the duration of the current child support and there is a balance still due, then those arrears can be collected.
What that means is that if the youngest child turned 18 in 2003 and they file in court for an arrearage by September 21, 2006, then they are now barred by the statute of limitations.
That would be an absolute bar but you need to hire a lawyer to help you sort through the dates and present them to the judge because it is going to be difficult to explain and calculate.
If the child did not turn 18 before that date then it is going to make it even more difficult since there is no way to relieve someone from the obligation to pay child support (if an order was entered) other than by going back to court. Unfortunately, many people do what you did and then don't follow up to be sure that the order was entered cancelling their child support and then years later are faced with the same situation you are.
There is also a defense in that the grandparents shouldn't have "standing", which is the legal ability to bring a lawsuit, to sue you for back child support unless there was an order ordering you to pay child support to them directly. The only other possible way they would have standing is if 1) he daughter somehow assigned them the right to collect the child support arrearage (and I've never seen a case stating this is or is not legal), or 2) your ex-wife has now passed away and they are trying to collect on behalf of her estate through the probate proceeding.
While I am a big believer in people representing themselves this is not one of those cases where you want to do that. In addition to the arguments set forth above there are also equitable arguments which can be made but those are based on your specific facts and are highly sensitive to what the ex says when questioned, what the records show, etc.