You have it clearly outlined right there and they have broken the contract by not paying on time and by verbal abuse (bad attitude and rudeness). Since they broke the contract I don't see how you owe them the return of the deposit. In my contract it says that the deposit MAY be applied to the last week of care if all conditions are met. In other words if the client has kept their part of the contract policies. That is not the case here.
However, if you can afford to refund the money to try to keep peace if they start to cause problems for you it might be best to be done with them quickly and quietly. Then, if I were you I would keep my ears and eyes open to make sure they aren't slandering you in any way because it sounds like they are a couple of immature idiots!