On G-425A re Parents City & Country Of Residence, if parents are deceased do you state that this is the case or do you put where they lived?

you may want to put in the guardians, fosterhome, or step parents address into that part and add that it's the guardian (not the biological parent[s]).

My husband's (USC) parents are deceased, we are filing I-485. Do we simply put "deceased" in City/residence box or give their last address when they were alive.

Just put 'Deceased'. While they are dead, how you can put their address.
Good luck.

I just don't know how much background info INS wants. Oddly enough though they are buried practically next door (in the cemetary)! so they haven't gone far.