I have an interview coming up soon and I was wondering how much reading I should do. The supervisors have cited 2 references and i have read them both. Is that enough? How important is it that i show that i have read thier papers? How would I do that? Do i do this by asking them specific questions about thier work?

I think that it is an important that you understand the PhD and have opinions about the direction you would like to take it in; read papers around the subject until you feel you can do this. Supervisors expect to see a certain amount of independent thought. Good luck.

Supervisors will expect you to have read any references they gave you. They will also hope that you understood them. Have a look to see if either of the references cite a Review Article, this will be much more useful in helping you understand the topic.

You should be given plenty of opportunity to show that you've read the papers, but if not you could always ask them to clear up somthing you haven't understood.

Thats a good point - how do you work in the reading you've done? I know it's not a good idea to contradict the interviewers but is it ok to ask them how new research in areas that seemingly contradict their field until you get to the fine detail will affect the proposed project?

It's OK to ask them about contradictory research - but for your interview stick to asking rather than contradicting or interrogating. Most supervisors will be flattered that you're that interested in their area - those that take offence may tell you more about them than they learn about you.