I would suggest letting him know. In any case, it's better that he know as soon as he can so that he can (worst-case) get his affairs in order, and if it's still in the early stages, it's doubly important that he know so that he can get it treated.
I don't so much mean, "Guess what, Grampa? You've got six months to live!" as I do "Grampa, we found out that you have cancer. We think you should see a doctor and get your will in order if you haven't done so already, just in case."