i am writing a novel from the viewpoint of a thirteen year old girl
and the narrator, but only as a fly on the wall in her presence. She
lives with her grandma and daddy. My question is when to call them
Irene and Harry as the narrator and when to call them Grandma and
Daddy as Maddy. That sounds like I just answered my own question. But
can I actually flip flop back and forth? Maddy of course would never
refer to her grandma as Irene, I know that, and she would call her
Grandma when speaking to her, but say she is talking to someone else
or thinking about Irene. Would she think, my grandma or just grandma,
and wouldn't it sound weird to go around saying my Grandma instead of
just calling her grandma? Then in the next paragraph, the narrator
says  "Irene is frying bacon" by the narrator. It gets awfully
confusing when you are calling the same person two different things in
two paragraphs.

Perhaps only use Adult names, except when Maddy is actually speaking
and addressing her elder.
"Daddy, why is grandma so weird?" Maddy asked Harry, referring to Irene. 

Respectfully, I believe the Reader will "get it" that Maddy speaks
appropriately, in quotes, and the narrator speaks as an adult about
adults and calls them by adult familiar names. The Reader probably
will have picked this up by paragraph one, unless the intent is to
have that relationship a mystery.

Example:
Maddy loved her Daddy very much. Harry would teach Maddy how to play
ball, and together they would sit and listen to Irene's stories by the
fireplace.

The key is to not lose sight of the relationship of Maddy to Harry and Irene. 

It is a tough thing, but you probably already know and understand this. 

I hope this free comment helps in some small way.

PS: Does the Narrator actually speak or is the Narrator merely the story?

You must remember from who's point of view the story is coming from.
If it is from the 13 year-old's point of view, then that's the way the
reader should experience the story. You're right when you say it could
get confusing switching from them having a name to not having one. I
would suggest that you should not even give the grandparents a name.
You can still narrate the story as a fly on the wall, but if she is
the main character, then you must narrate things as they appear to
her. Unless it is absolutely necessary, don't give them any names at
all. I would even suggest using pet names like papa or nana, instead
of grandma and grandpa.