"I'm expected to tell my daughter not to call when they're there." Does "call" mean "visit," OurNana, or " ring up and talk on the phone?" Many posters here seem to be taking it to mean "visit.' However, you say, "I don't think I should have to tell my daughter she can't talk to her niece and nephew." So I think you're speaking of phone calls.
I don't think YOU should be the one to tell them that either. I agree with those who say DS and DIL have to get up the courage to do that. However, I don't think they have the right to control who calls your home or whether or not your DD can call her DM (dear mum).
I would let DS and DIL know they should speak to DD and let her know she can't talk to their kids, and that if she calls you, their rule for the kids will be enforced. You will need to enforce it though ("I'm sorry, DD, I have to respect the parents' wishes.)
Another option would be to avoid having your GC in your home while this is going on. But then, you may get to see them less often.
So sorry you are facing this!