Fran,
I say - talk to them straight. Use discretion, but don't hide too many truths from them. This time is confusing enough for them. Kids are smarter than we know sometimes, and they deserve real answers to the tough questions.
Remember Kathleen's brother's funeral? There were "get well" cards in the coffin .... those kids will have a really hard time dealing with the future if they think that Daddy is "just sick".
Chin up, MR. C ...... we'reall here.