One of my favorite GD cover CD's of the last few years is Jesse McReynolds' "Songs of the Grateful Dead", although it may have been better titled as Songs of Garcia-Hunter because most of the tunes are Hunter's and there's no Bobby songs on the CD. Jesse is a bluegrass mandolinist that was a hero of Jerry's back in his bluegrass days, but the songs are a bit more country sounding than bluegrass. Other musicians on the CD are Sandy Rothman, David Nelson and Stu Nixon. Highly recommended.
One other CD that's worth mentioning is The Persuasions Sing the GD. Mostly acapella, very good stuff !
I also like Willie Nelson's version of Stella Blue.