See, I think that children, no matter what their age, who are dependent on the parents for everything (roof, clothing, food, phones, etc.) should be expected to go along with the Sunday dinner thing. Especially when it has been a long standing tradition - they knew it was Sunday and that Sunday means dinner at Grandmas. It's kinda' like the price they have to pay for being completely supported by the parents.
When I was in my early 20s I still lived at home. Dad paid for everything, even tho' I worked and went to school. There were many Sundays when I struggled out of bed after a late, late night, and went to my Aunt's house for Sunday lunch. Did I want to? Not really, but it was part of being a family and made my father happy.
I wound up be the grandchild that took my Grandmother grocery shopping and errand running every Saturday. I groused and complained and bitched to my sister b'c she never would. But, in the end, I had a wonderfully close relationship with my Granny. It was worth skipping an outing or two with my friends to be with her.
That being said, it sounds like everyone over-reacted. Have the kids call and apologize to Grandma and promise to be there next Sunday. And let them know that you expect them to be available on Sundays from now on. Have everyone in your house apologize to each other. Everyone handled it poorly, IMHO.
It is family, it is a tradition. Sure, it can be a drag for your children- but they will be self supporting and out eventually and then can make their own decisions.