As you are confident that your dc won't find out from any other source, I suggest that you proceed with your original plan to go ahead with the party and that you wait until tomorrow before telling them of their df's death.
My reasoning is that announcing this news before the party will undoubtedly impact on your ds1's enjoyment of 'his' day, while telling them shortly afterwards may cause him/them to feel bad that he/they enjoyed themselves, or cause them to associate parties with bad news/their df's death.
If any of them should ask why you delayed telling them I suggest you simply say you knew that their df wouldn't have wanted to spoil a happy day for ds1 and that he would have wanted all of his dc to have a fun time at the party.
However, I suspect that asking when you knew won't be the among the first questions any of them ask and, as very young dc tend to live in the moment, breaking the news on Sunday should go some way to ensuring that your 7 yo's birthday has some semblance of normality for him/her as well as ensuring that all of your dc will have positive memories of ds1's special day.
As to what excuse you can give for their df's absence at the party, I can only suggest that you say something along the lines of you're sure he'd be there if he could but 'something must have come up' and hope that the event proves sufficiently distracting to forestall them continually querying his absence
I also think that you need some time to begin coming to terms with this shocking news before you set about relaying it to your dc and that you should ask your dps to entertain your 3 youngest for a couple of hours on Sunday morning so that you can talk to your older dc without distraction before telling the littlies.
I am so very sorry for your loss and for the circumstances and manner in which it's come about.