I volunteered for one of these before (it was a series of one-on-one sessions). I patiently walked an elderly gent through the absolute bone basics: starting a browser, using the address bar, using Yahoo mail. It was quite slow at times, but he was a pleasant old guy, and at the end of it, I think he really was ready to correspond with his grandkids on his own. It was definitely rewarding, and I'd recommend it to anyone.
I have an 86-years-old grandmother that is valiantly trying to get used to the Internet.
It takes her a LOT of time to learn the most basic tasks, and I know it's an effort on her part (my grandfather doesn't even try).
She has now mastered the Google search, and so... she uses nothing else :) . That's probably what happened to these other old gentlemen (my grandmother doesn't have a facebook account because she's worried about privacy, but it could have happened to her).
The interesting thing I've noticed with my grandparents and great-aunts/uncles as test cases is that it's not really universal. Both of my grandfathers are over 80.
One of them carefully writes down how many times he has to click on something (he can't ever remember whether to single or double click), doesn't really understand that he's not on a typewriter and can use the backspace, so all of his mistakes are still inline, is comfortable with email and not much more. His little sister, in her 70s, however, has more Facebook friends than I do.
My other grandfather, the older of the two (83), plays backgammon against random people on Yahoo Games, uses instant messaging, regularly buys stuff online, reads my blog and even asked me what Twitter was, commenting that, "It seemed like another kind of blog." When we first set up a company newsletter, he was the first subscriber. He still works most days and complains that he can't get DSL at his house and so he prefers to surf at the office.
Years ago I ran a small computer class at a retirement community. Every week there would be four or five "students" who showed up (usually the same ones every time). They were all very bright and funny, and I enjoyed every minute of it, even when it was frustrating.
What I found, though, is that most of them weren't really interested in learning how to use their computers — at least, not to the point that they'd feel comfortable navigating to interesting new websites.
Instead, they'd usually tell me exactly what they wanted to do, be it access their webmail account or play Bejeweled, and asked me to write out a checklist detailing how to do it (click the Start button, click the blue IE button, etc.). This actually worked pretty well most of the time. But if something didn't go according to plan they were too scared of messing things up to trust their intuition (especially when I wasn't around).
I really wish the iPad was around in those days, it would have been perfect for them.
I'm sure it's mainly a matter of ignorance and not a matter of intelligence.