In the commentaries, Ian Noble mentions that Denethor was affected by the Palantir, and I know in press conferences he held, he was sad that jackson was not able to fit in denethor with the palantir. maybe just a view of the palantir burning in the pyre as we get in the book would do.
but movie wise (without knowing the story) then yes, he was driven mad by the loss of his son. I don't think he was 'crazy' in the film though until he sees the hordes of orcs outside minas tirith. that (movie wise) tips him over the edge.
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