I can't find any references to what happened to their children... if he did enslave them it would make him one of the darker figures in American history. Possibly human history, as I can't seem to recall any historical figure that enslaved his own children but I might be forgetting someone.
Jefferson did father all six of Hemings' children, four of which survived to adulthood: Eston, Beverly, Madison, and Harriet. And they did live as slaves at the Monticello estate.
Jefferson would go on to free Eston and Madison on his deathbed in 1826. Harriet escaped from Monticello in 1822, though Jefferson made no attempt at having her returned.
It should also be noted that this kind of behavior wasn't unusual in colonial America, in fact it was rather common for slave masters and slave-handlers to father children by their slaves. Sally Hemings was a mixed-race child, and the half-sister to Martha Wayles, Thomas Jefferson's wife.