I coach a 15U team and we just finished a week-long horrible run of basketball:

Back-to-back league games on Monday night, in which 2 of my 10 guys called in sick.
In those games, I lose 2 guys to injury. And we lose both games. The first we kept competitive for 3 quarters, but ultimately ran out of steam. The second, we could have been competitive but had to play with 6 when 2 guys went out in Q1. Simply didn't have any gas left.

Two practices in 2 days. Limited attendance with 2 players still sick and the 2 injured from previous night.

Weekend tournament. The two sick players return. My 2 injured are still out. Then I lose another player to an ankle sprain in the first game. The next day another player (our best) calls in sick. In case you're keeping count, that's 3 injured players and 1 sick. Leaving me with 6. Some time between the 2nd and 3rd game, another player gets sick. Yes, that's now half my roster out for the game.

Then a league game last night. 9 of my 10 are back, but none of the returning players are 100%. We lose by 40.

Before last night's game, I made the decision to cancel our practice this week in order to give my guys rest, and hope that whatever is getting my guys sick won't get passed along any more. But that was before last night's awful game performance in which the team is perfectly beatable, but just didn't have the focus or effort. My hope is that they just ran out of gas, but a lot of our mistakes were mental and I don't know if the rest will do us any good.

Do you think giving them the week off (we normally have 2 practices a week, but this week would've just been 1 long practice) was the right idea?

It sounds like you play a lot of games, so I doubt a week off of practice is going to affect their performance negatively. If illness and injuries weren't significant factors (which it sounds like they were) then taking a week off would be a different story.

Sometimes it's okay to regroup and change things up a bit when you run into situations like this. Pushing it when kids are sick and injured would probably make matters worse.

Hope you get back to full strength soon.