Mandi,
I agree with what Gary said....kids know more than perhaps we sometimes give them credit for. They have intuition seemingly beyond their years sometimes. I have four children - ages 8, 9, 11, and 14. I have had more detailed discussions with my 14 year old than the others because she understands more and asks a lot of questions. But I have taken the same approach Gary suggested - open and honest with the kids about everything, no secrets. I've tried to do it with a positive flair so the kids can see me smiling and laughing and being "ok" with everything. At least in my case, the kids seem to take their cues from how I'm approaching it.
When I was about to have my neck dissection and I told the kids that I could have some arm mobility problems afterwards, I made some funnies with the after-effects - showing them how I'd have to throw a football now (told the boys I'd "throw like a girl" now), how I'd swim lopsided, shoot airballs in basketball, etc. They got the biggest kick out of that. I think they 'get it' that it's serious stuff and that nerve damage or loss of mobility isn't funny in and of itself. But them seeing me laughing about it and just rolling with it made them feel better and not so scary. Maybe humor isn't always appropriate but that's just an example of what worked for our family in that case.

Best to you,
Steve