If they thought there were problems then they would have stayed in. I went home after 6 hours, like Redcrx, I even nipped into to work on the way home to show him off and lots of other people I know go home the same day. A week in hospital after a normal delivery is rather excessive considering the strains on an already overloaded NHS.
Redcrx is right though, in my health authority you have to wait for the 6 hour check but maybe its 3 in yours. Worth inquiring about I suppose. I had a bath straight after and baby wasn't bathed until the next day. Skin to skin contact and swaddling for the first 24 hours is the normal course of action, not a bath.
Was the baby seen by a doctor and had all the reflexes checked etc? I suppose there is a different philosophy, we aren't treated like invalids, we are able to judge our own capabilities. Be proud your daughter in law did so well and don't let this shadow her experience and the arrival of your granddaughter. The midwives obviously did a brilliant job getting her here safely and the midwives have to observe the baby feeding before you are allowed to go home. Maybe there is a case of gross negligence here but if the baby is feeding and was checked over by a doctor I doubt you have real cause for concern. I think the first thing I asked was when can I go home?