I would strongly suggest not to pick up a keyboard with light up keys; I like to call them "Whack-A-Mole" pianos. While your children would initially find it fun, that feature makes it much less likely that any long term learning will occur. Blinking lights illicit different mental responses than actually reading music. Often a child won't even be listening to what he or she is playing; the piano in a sense, plays it for him. In a sense, it strips music down to little more than playing "Whack-A-Mole" on plastic keys rather than with a padded sledgehammer.
A simple Yamaha or Casio will do just fine, and loveofmusic is right. There are FAR too many to list. The only thing I would add is that something with at least 48 keys would be great, and 66 would be a solid investment, taking into consideration early two-hand studies. I hope her children take to it well! It's awesome that they actually want to take piano lessons themselves.
Loveofmusic, I mean no offense to you in what I said against light-up keyboards. I do very strongly mean it when I say that it dumbs down the learning of music on an extreme level. Let me just say this:
In a society which favors instant coffee, Easy Mac, drive through fast food, IMs, faster internet connections, texting, and ordering pizzas online, all in the name of being faster and faster in a mad rush world, one thing has never been and, it seems will never become any faster. That is the time it takes to practice and learn a musical instrument. No matter how many "3 Easy Steps to Being a Concert Pianist" or "How to play Mozart for Anyone" books they publish, it still takes just as much time to really get it, and these easy "shortcuts," such as the light-up keyboards, often undermine the basics in favor of quick, albeit sloppy, results.
I apologize for the rant, but that is how I feel about these things.
_________________________
Music Gear Review - Keyboard/MIDI and Songwriting Editor/Mod
"I don't like it, and I'm sorry I ever had anything to do with it." - Erwin Schrodinger, on Quantum Physics
Keys: Nord Stage 88, Nord Lead 2, Yamaha W7
Upton Bass Custom Upright, BSX Allegro EUB, '80s Peavey T-40, MIM Active Jazz Bass, Godin BG-5, Fender Bassman 100, `68 Fender Bassman 50 head, Gallien-Krueger Fusion 550, SWR (pre-Fender) Goliath III 4x10, Markbass 2x10 Traveler