I still struggle with the thought that parents behave that way themselves. Sure, the kids behaved badly, but the fault is on the parents in this situation and honestly, THEY are the ones who behaved badly. I feel bad for the children, because they may never know how to behave properly in social situations as they get older.
I never struggle with the idea of inviting nieces and nephews over, but that's because if I tell my brothers that my cats may bite or scratch if their tails are pulled, my brothers make sure their kids don't do it! Then again, we do have an open rule where any family member may reprimand a misbehaving child (who is a member of the family). If it involves more than a reprimand, we let the parent know and it's taken care of, immediately.
Those children are being raised to behave like this b/c they have lazy and undisciplined PARENTS. Little kid = little problem. Don't nip it in the bud then.... big kid=BIIIIIGGGG problems. I would say something to the parents about their childrens' behavior in someone else's home.
ETA: those families need "Nanny 911"!!!!!