I used to think face to face was the way to go. I'm not shrinking violet and can handle some flack. But last year I had to let a family go and mom lost her mind in my foyer. It was upsetting for everyone who saw it - including other day care kids and my own kids...
My new policy is that I do it in writing - be it email or letter or even text - the last I would make sure you keep simple "I am no longer able to provide care for your family as of today. Will send a formal letter." This gives them some time to deal with the information. Not sure if it will help, as I haven't had to use it yet.
But it's my plan and I'm sticking to it