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suppose an enemy unit is in the middle of an area terrain piece and I assault it with 2 units, A and B.

A has frag grenades.

B does not.

in the ensuing combat, does only squad A go at initiative 10 along with the enemy unit, or do both A and B go at initiative 10?

Similarly, what if only the Vet. Sergeant of squad A bought frag grenades, is he the only member of his squad that goes at 10?

Yes on both counts. The defending unit will keep their heads down when attacked by unit A, but will strike first at unit B. They will also keep their heads down for the vet sgt, but not the rest of the squad. It's pretty silly, but dem's the rules.

Page 39 of the rulebook has all the answers you need. Make special note of the use of the word "Model(s)" instead of "Unit(s)."