A Wii would definitely be more fun for kids of that age, but make sure to buy a second controller to stop the arguments.
As WoWo says, the games will be more expensive as they're newer, around �35- �40.
The best place to buy games varies, Game can be good if they have offers on, Tesco can be quite cheap both in store and online. If you're confident with using eBay then that's probably going to be cheapest if you're buying second hand, although have a scout around first to see if you can't pick it up new for a similar price.
Another thing to consider is something like www.gamesmonster.co.uk - a rental service where you pay a monthly fee and can keep the games as long as you like.