Does one refer to the paternal grandparents and the other to the maternal grandparents?
No, adding the ita or ito at the end of abuela or abuelo is usually to show more affection, the real term is abuela(grandmother) and abuelo(grandfather) you can add ita or ito to many words to make them sound better.
What Is Abuelita
one si grandma + grandpa and the other is grandmother + grandfather
No, there is no difference.