I really don't see how you could do anything but graciously accept in this case? I would put some cool fruit kabobs together, perhaps a little gift (sidewalk chalk/bubbles?) for each child and put your best smile on for an hour or so. If these children are your children's only friends (as is the case with my own 3 year old son) do you plan to include them in your child's birthday parties? So tough to cross the line, huh?