Of course they should save and prepare. The main reason IMHO to do an interest-only loan is to invest the difference and build wealth - that should go without saying in this case.
They have three years. A problem could occur, but this sounds more like media hype than anything - it will be 2010 before they even have to start worrying. I’m not sure what their income is, but they have a lot of time to save up a nice chunk of money by then.
My son bought with a no money down, two loan deal, but he refinanced it two years ago. He had the equivalent of a good dp in his 401K, but didn’t use it.