Wireshark on Wifi

As per my reply, Wireshark, Network Monitor, and other network analyzers aren't really designed for people who just want to know what sites their children are visiting, they're designed for technical users such as network software developers, network administrators/managers/troubleshooters, and the like, who need to know technical details about what traffic is going over a network.

You might be better off with software designed for the average user or, at least, the average parent - and designed for the purpose of monitoring network activity on other people's machines, rather than for the purpose of capturing raw network traffic and letting you look at it in detail for whatever you might be trying to find. Some Googling found, for example, Symantec's Norton Online Family and McGruff SafeGuard. You may have to install software on their PC's and smartphones to use it; make sure whatever you install supports whatever operating system their PCs and smartphones are running.

I have D-Link WRT110 router

(I assume you mean "Linksys WRT110 router" - I couldn't find any WRT110 product on D-Link's Web site, but I did find one on Cisco's page for Linksys products.)

I want to check what my kids are doing, the web sites they visit, the chat rooms and even reading the chat history (like Whatsapp on smartphones). Is that possible to do with Wireshark

Yes, if either

1. you use a hub or network tap on the connection between the router and your Internet modem (cable modem, DSL modem, etc.) and plug your PC into it on the Ethernet connection (which might cause problems with its Internet access, including resolving host names from IP addresses)

or

1. you run a Wi-Fi sniffer in monitor mode (which means your laptop can't be running Windows if you're using Wireshark, but if your laptop is running Windows Vista or later, Microsoft Network Monitor might be able to capture in monitor mode if the adapter and driver support it) and the sniffer supports WPA2 decryption (which Wireshark does) and you keep it capturing continuously so that every time your kids' machines connect to the Wi-Fi network you capture the setup packets (which means you don't get to clamshell it or let it go to sleep - you'd probably be best off running dumpcap from the command line).

In either case you'll probably have to end up doing continuous captures, which means you'll have a lot of data to dig through if you want to catch them surfing pr0n or whatever.

What version of Wireshark do I need?

Probably any sufficiently modern version would do, but the newer, the better - go for the latest 1.8 version.

Once captured, do I need to decrypt the datd

Yes, as you're using WPA2.

and if yes, how?

Thus. Note, however, that, atop any WPA2 link-layer encryption, the services they're using might also use, for example, SSL/TLS encryption over TCP. Wireshark can decrypt SSL if it's built with the right support libraries (I don't know what support libraries various versions of Wireshark on various OSes are built with) and RSA key exchange is used and you can provide the RSA keys, as per that documentation.