A little research into it, and it would appear that particular model was produced during WWII, and considering what you say the condition is, as well as the items it went with, I'd think it would be worth quite a bit.
A little reserach and I turned up this ad on GunsAmerica:
Guns America Ithaca 1911
It was listed at $2K. All things considered, personally I would hold onto the gun. Something to remember your grandfather by, as well as a family heirloom sort of thing, but thats just me.