Just found this website which has great advice on talking to young children about cancer in the family:

http://www.livingsunnysideup.com/

Another piece of advice I was given was that if you have to tell young children that someone is dying, it helps them to write a goodbye letter (or draw a picture if they are too young). I have not had to be in this situation myself as my Mum died before my children were born, so would appreciate feedback from anyone else about what worked for them.