Can I apply for I485 status adjustment when they get here and while they are here or do they have to go back and apply through the US Consular Service

On the one hand, your parents could adjust status in the U.S. after entering on a VWP: the general prohibition of such adjustment has an exception for immediate relatives of U.S. citizens. On the other hand, it is basically dishonest to enter the U.S. under a declaration that you have no intention of staying while knowing this declaration to be false. Aside from the issue of personal integrity and respect for the country where you live, there is the risk of retribution: governments, like elephants, forgive little and forget nothing. If the Immigration feels that your parents' VWP entry constituted a material misrepresentation, the agency has numerous means to express its feelings. The costs of appealing from an adverse determination can far exceed the costs of a round-trip airfare. Lastly, there is a purely practical consideration: the immigration inspector at the airport has the authority to deny your parents entry if they do not prove to him/her that they have no immigrant intent - and it is going to be difficult with immigrant petitions in their names in the system. Of course, there is a possibility that your parents would breeze through the immigration at the airport - and through the adjustment process. As always, much will depend on the persons who will decide you parents' case. There is no statistic on which a reliable risk assessment can be made. I just pointed out the pitfalls; the decision is yours.