This is her dad, not yours, she should bear the responsibility to bring him over if she wants him here so bad, and she shouldn't force you to commit to such a responsibility, especially when you're paying for all her expenses.
To withdraw, you just simply contact CIC. Be warned that this will cause the father's app to be refused, and your wife will definitely know that the refusal was due to your withdrawal of support.
Don't feel bad about doing this, as a 20 year undertaking is a very long time, and if he ever goes on social assistance, you will have to repay it for the rest of 20 years or until he dies, whichever comes first. This can be an extremely financially devastating situation for you, especially since your wife isn't even working, so even though she's equally liable to repay the government, they can't do anything to her if she's got no income, they'll just go straight after you instead.
Think of it this way. Your wife can't even take care of herself, how is she supposed to take care of her aging father? A sponsorship, by definition, means to provide for someone. If she can't take care of him, then it's pretty much you're taking care of him 100%, and why should you do that? He's not even your father.