Hi Kim,
it would be hard to put your wife and her friend in kids town, it's only kind of daycare for the kids themselves between ~10am and 5pm.
So every child "lives" in the camp of his parents anyway. During the day you don't have to send your children to kids town, you should just make sure that they are supervised by your wife or an adult of choice. As far as I know, most families stay in the Water Camp - to find out how hospitable the Fire Camp is towards kids, I recommand to ask some of the groups staying there or maybe create a post in their board here.