I upgraded my iCloud storage plan to 2TB. I would like to share that with my family on the shared family plan but presently I am paying for each of them to have 50GB. Do I simply cancel their plans to have them share mine?

See the information in Share an iCloud storage plan with your family - Apple Support including the following:

When you share your iCloud storage, any family members using the free 5GB plan are added to your family plan automatically.

If a family member is already paying for their own iCloud storage plan, they can choose to switch to your plan or keep their own and still remain part of the family. When they switch to the shared family plan, they get a refund for the remainder of their personal plan. They can't keep their current plan and use the shared family plan at the same time.

Yes. See below from my previous post:

If a family member is already paying for their own iCloud storage plan, they can choose to switch to your plan or keep their own and still remain part of the family. When they switch to the shared family plan, they get a refund for the remainder of their personal plan. They can't keep their current plan and use the shared family plan at the same time.

If they choose to switch to the family plan, does their current plan data automatically transfer over to the family plan?