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I would go ahead and let it back up everything (which is the default setting for Time Machine), and 500GB should be enough for two computers (unless you have hard drives bigger than 250GB in those laptops).
I would recommend doing the first backup to the Time Capsule over ethernet, though, as a wireless backup could take days (no joke!). After the initial backup over ethernet, then wireless backups should be fine (and they're done automatically -- no user intervention needed).
Also, the Time Capsule would probably replace your current AirPort Extreme, as the Time Capsule is both a backup device and a wireless router.
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