Looks like I missed this post as well so I'll throw my 10 cents in as well.
Yes do all the things everyone has suggested to protect yourself from recourse, mostly in the form of informing them of the repercussions of their choice. Sounds like your clients have paid their full price for the work done, they have paid their hosting fees up to date. You'd be pretty stupid to tell them you won't let them host with you if you can make money on them for hosting lol, not to mention how much simpler it will be if you DO end up having to fix their mess later.
If the above is the case then the website belongs to them. They hired you to create a website, not make them a temporary home correct? They paid you to design them a website and host it. If so then you really don't have the right to refuse to give them their property and any web builders out there that would do so are just plain tacky and nasty. You don't have the right to give them ultimatums, shut them down, etc. it's theirs to do with what they will.
Get them to sign an affidavit that the files handed over to them are as is and anything after that fact is theirs to deal with basically. You surely should not shut down their access to their files on your server, they should have already had that access if they paid for hosting.
There's nothing I hate worse than hearing how a client's previous web builder (dealing with 2 of those now myself) have blocked their access to their files, turned off their sites, wouldn't give them their website files at all, etc. etc. just because they decided to go elsewhere for service or they are changing designers. That says myriads about your characters when you do that and you can pretty much guarantee that they wont' be back for you to fix their mess and get more money from them later if yo DO do that. It's even worse when it's like the 2 I'm working with now and their web designers have basically fallen off the earth and won't do anything and haven't even finished what they got paid for.
Just my opinion of course, but give them what's theirs and just make sure they understand that they are on their own unless they pay you maintenance fees to do work later, and let them know up front that the fees are higher for piecework maintenance than it is if they are a full fledged maintenance client. You may be surprised how fast they return, and if they don't that's their prerogative.