Yeah, this is a tough situation, because it sounds like a lot of details have already been agreed to--that they could stay at all, the number of days, the price they're paying. It would be super-awkward to call them now and say the deal is off, or they can only stay two nights, or they need to pay a lot more money. That call can still be made, if you think you absolutely cannot deal with them being there, but I wouldn't blame them for being upset at this point. From the OP it sounds like DP made the offer to them, so even if it sounded too good to be reasonable, it doesn't feel to me like they're purposefully trying to mooch.
I think I would either have DP make the call, and deal with the fallout from that, or simply not go. Just knowing myself, I would be so resentful the whole time that I would just poison myself and not have a good time at all, and I wouldn't be able to stop it from bleeding out to other people. So knowing that, I would either remove myself from the situation, or remove them. But, other people might be able to deal with it better.
ETA: If DP physically can't go alone, then to me the options seem to be, tell the other couple they can't come, or neither of you go. Since this is for DP's job and it sounds like you've prepaid for stuff, obviously you don't want to take the latter option. I think I would just have DP call and say that upon further reflection, and realizing how much stuff would be in the small hotel room, you guys just don't think it will work, and you're really sorry. Any chance the conference organizers are handling roommate assignments (they do at some) and you could direct this couple to them for help?