I asked this question too, because I'm in a very similar situation as your wife.
I have included them on my application, and though my ex refused to take them for a medical, he is writing a letter stating that he refused to let them have a medical, and I will be sending that to CIC as soon as they have my file on record. I included my kids on my application but left out the part where it asked for their medical information, and added on a separate sheet of paper that I wasn't seeking PR status for them. I understand that I may also be asked to sign something stating that I am banned from ever sponsoring them in the future, and though it breaks my heart, I have no other choice.
Definitely include the kids on the application though! If you don't and CIC find out that they exist, your application may very well be turned down for misrepresentation.