You are covered by the Terms of Service of Airbnb and their Host Guarantee. Getting a notice to appear in Small Claims Court is certainly upsetting and not something to be taken lightly. However, the guests cannot actually sue you since their contract is with Airbnb - not you directly. They need to sue Airbnb and are using this tactic to intimidate you into giving them some money back. Stay strong and do not give in - their cancellation is not your fault and you do not need to be punished for their actions (or lack thereof)!
Get Airbnb involved immediately. Use the "search for anything...." box above and find the Community Help Guide to Contacting Airbnb and get them and their legal team involved. Do not contact the guests again unless Airbnb instructs you to do so.