Instant messenging seems like a potential killer app. That and a sort of virtual sightseeing or nice avatar system for walking around and meeting people. It seems like the main problem for the elderly is the sense of isolation, and while email helps, the interactive nature of an IM session feels a lot more like human contact. Video cams and microphones seem like a bad idea, however, because they don't store state, and so require more mental energy and memory. A good IM client (iChat, and GAIM with the appropriate plugins) will show you the previous conversation that you are resuming when you start to chat with someone. That's a great thing for when your attention wanders.

Instant messenging combined with easy to use avatars, perhaps? I dunno. 3D interfaces seem right out, however. Perhaps a nicified version of the original Ultima Online with a different theme, no fighting, and improved usability?