something similar happened to me ONCE.

A girl who had posed for me "in the altogether" heard that I had posted one of the images to a forum. She heard the term "on the web" and went absolutely ballistic.
Without any consideration of the work ... I did not consider it to be a "nude"; the only body parts visible were hands and feet - she could not even be identified ... She cut me off - would NOT return my calls or communicate in any way. Even trying to contact her through her friends was useless. She *never* even looked at the print of that particular image I tried to send her. Work from that session - much "peppier" - had been exhibited in galleries - she had seen that work and approved. She was an experienced - many years - figure model for Life Classes in the various art organizations in the area.

I had paid her for her work- and had the usual "Model Release", which would be an effective defense against an "Invasion of Privacy" law suit.
So - I'm covered legally - what is left is a moral and ethical question.
I've HAD to hold true to the principle of "Not being the cause of grief to anyone."

I've pulled the majority of her work, with a few exceptions - and those were three of the images having been exhibited in galleries. *ALL* of her work was removed from any and all web locations, and none will be posted again. That is the best I can do.

This situation is different - in my case there was no demand for the return of ALL images - nude or not.
Considering the circumstances cited - and a lot would depend on the personalities and attitudes of those involved - I might try to discuss the model's - and her husband's concerns - and try to negotiate..
Selling the negatives to them -- I don't think so ... If they were as offended by their content as they claim to be, I would wonder why they would not consider their destruction to be ideal.
On the most basic level - this is still would be *my* work - and I think I'd hold on to it - whether or not I displayed it. As souvenirs - or for future use/ reference -- speculation that attitudes *might* change...

The Copyright Laws would apply. The "creator" of the work holds the copyright unless expressly transferred. The negatives - or any other physical artifacts - really have nothing to do with it.