Question Summary:
Excellence of the name Muhammad and naming after ones grandparents

Question Detail:

 I want to know the excellence of keeping the name Muhammad for a boy. Also what is the ruling regarding naming a child after his/her living grandparents? 

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
As Muslims and in particular being from the Umat of Rasulullah Salallahu Alaihi Wasalam, we take great pride and honour in naming our children Muhammed after the most blessed and praised name of our beloved Rasulullah Salallahu Alaihi Wasalam. 
Rasulullah Salallahu Alaihi Wasalam also encouraged us to name our children after his blessed name.
Consider the following Ahadith;
 قال رسول الله صلى الله عليه و سلم تسموا باسمى
Rasulullah Salallahu Alaihi Wasalam mentions ``name your children after me’’ (Muslim 206 Qadeemi) [1]
 
من ولد له مولد فسمىه محمدا كان هو و مولوده فى الجنة
It is also mentioned in another narration: "To whomever is born a boy and he names him Muhammad, then both he (the father) and his son will enter Jannah."(Raddul Muhtar p417)[2]
While the authenticity of this hadeeth is contested by some Ulama, other Muhadditheen have declared it to be reliable. [3]
 
It is permissible to name ones child after his or her grandparents, as long as their (grandparents) names conform to the Shariah.
 
And Allah Ta’āla Knows Best
Ismail Dawoodjee
Student Darul Iftaa
Zambia
Checked and Approved by,
Mufti Ebrahim Desai.
www.daruliftaa.net 
سموا باسماء الانبياء (فيض القدير ص148ج4 علمية)[1]
تسموا باسمى و لا تكتننوا بكنيتى (مسلم ج2 ص206 قديمى)
التسمية باسم يوجد فى كتاب الله تعالى جائزة(شامى ج6 ص417 سعيد
من ولد له مولد فسمىه محمدا كان هو و مولوده فى الجنة رواه ابن عساكر عن امامة رفعه قال السيوطى هذا أمثل حديث ورد فى هذا الباب و اسناده حسن (رد المحتار ج6 ص 417 سعيد)[2]
من ولد له...لكني وجدت له طريقا اخرى اخرجه منها بكير ايضا و الله اعلم (تنزيه الشريعة ص184 ج1 التوفيقية)[3]