When my dad died, my girls were just turned 7, and almost 4. I took them to the wake, but did not take them to the funeral. Now mostly because I knew I was going to be a total wreck, and because my husband's sister had flown out to help take care of them throughought the whole time. They knew Grandpa was ill and we talked about the fact he was not going to get better prior to his passing.
At the wake, they were given the angel pins and they each got a cross to hold. They wanted to approach the casket, and did so several times throughout the wake. At the end of the evening before my SIL took them home to bed my 7 yr. old even kissed my dad goodbye. After the funeral, my SIL met us at the cemetery and we did a balloon release with all the kids and then we did take them to the luncheon.
It can be a long day, so I would suggest taking quiet activities, and if it is at all possible maybe have someone be available to take the kids home if needed; providing you are planning to stay for the whole duration. Aside from the "kitchen" area the funeral home had another private room down the hall and it had a tv and the kids watched tv and colored in there. Just be ready to remove them from the actual viewing room during any prayer services, etc.
I personally feel it was a good decision on our part to involve them. You know your children best, do what you feel is right for your family. I'm so sorry for your loss.