Why is Grendel so upset?

Grendel is so upset in Beowulf because he ultimately represents the epitome of evil. In the epic poem we learn that Grendel is a descendent of Cain, and the author of this epic poem makes this allusion to Cain to emphasize how evil Grendel is. Grendel is a descendent of the first murderer in literary history; therefore, he is ultimately shunned by society and King Hrothgar and his men.
King Hrothgar's mead Hhall is constantly described as golden, emphasizing King Hrothgar's connection with heaven and his role as a Christ-like figure (before Beowulf comes into the picture). Furthermore, his own throne is described as golden and cannot be touched by evil (i.e., Grendel). Whenever Grendel hears the joyful singing and fun that is being had at the mead hall, not only is he reminded of the joy he can never experience, but he also feels anguish at the true pleasure Hrothgar's men are experiencing in the mead hall.
This dichotomy that is created between King Hrothgar's golden hall and Grendel's evil nature sets up the one of the most powerful Anglo-Saxon themes, good versus evil.
Depending on which translation of Beowulf you are looking at, Grendel's displeasure with the singing of Hrothgar's men can typically be found at the beginning of the epic poem before Beowulf arrives and Grendel kills Hrothgar's men.

Grendel is primarily upset with Beowulf because he feels left out. The theme of isolation from society is an important one in Anglo-Saxon literature. Because Grendel is a murderer and a descendant of Cain, he has transgressed the bounds of society and is demarcated as "other," banned from the mead hall, the site of laughter and social engagement. As such, when the Geats arrive at Heorot, Grendel's old pain is rekindled at the sight of so many warriors joking and boasting together. This reminds him that he himself cannot be part of this kind of social enterprise, and he begins again his attacks on the inhabitants of the mead hall.
A connection is also drawn between Grendel's rekindled anger and God, but most probably this is a later addition to the text and was not present in the original oral tradition.