Here's what to do when your Mac only displays a grey screen on boot (tested on OS X 10.6):
1. Remove all peripherals. One of the main causes is your Mac is connected to incompatible hardware, especially USB devices. If your device is Mac supported, be sure to update the software or the device firmware.
2. Safe boot by holding ‘shift' as you press the power button. This will take longer than a normal boot since it checks the disc and performs some other diagnostic tests.
3. Reset the NVRAM and PRAM by holding ‘Command-Option-P-R' as you press the power button. More about what this type of RAM is from the Apple support page titled Reset NVRAM or PRAM on your Mac – “NVRAM (nonvolatile random-access memory) is a small amount of memory that your Mac uses to store certain settings and access them quickly. PRAM (Parameter RAM) stores similar information, and the steps for resetting NVRAM and PRAM are the same.”
4. Hold this key combination until the Mac chimes twice, then release it.
5. Boot to the OS X disc.
6. Run a disc repair and permissions repair from the Disk Utility.
7. Run Apple Hardware Testing by holding ‘F2' or ‘d' as you press the power button.
8. Reinstall OS X by either formatting the computer or running an Archive and Install.
That's it for this Mac grey screen on boot article. To see more of the different types of startup screens your Mac displays, head over to the Apple support page on the topic.