I don't think your in the wrong.
You are owed 2 weeks notice and it's in your contract that they both signed. You even made the effort to tell them that they still have one day owed to them ~ it was THEIR choice to say no thank you.
I agree with Momof4 that you should be firm but nice and professional and let them know due to the contract that they signed you are to be given 2 weeks notice. You offered to let them use their day and they chose not to and wish their family all the best and the issue is over.