I would say,

"I really enjoyed meeting you and your family during our interview. However based on your current needs, I do not think I am the right fit for your family at this time. If you would like to be placed on my waiting list should a position that does meet your needs come up, please let me know. Thank you for your time and I wish you the best with your search for care."

I wouldn't really want to say "No" permanently as who knows what can happen in the future and what your business needs may be at a later date.

If they push or ask for more details, I would just tell them that at this particular time, their needs don't match with your program. They have 2 kids, you only have 1 opening- they want long days, you want a shorter day- their child doesn't nap, ALL your DCK's do.

Nothing wrong with your wants and nothing wrong with their needs...they just aren't matching up right now. Saying no with emphasis that you are open to re-visiting them when and if an opening arises is good business practice IMPO as the family will walk away knowing you were honest, up front and professional as well.....all pluses for building a good reputation.

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