So the master cylinder is leaking fluid, probably into the booster, and they are recommending replacement of both? If this is that case, then it sounds legit. I would want to know why the lights are on though. Is it from low brake fluid or is there a damaged sensor?
If they topped up the brake fluid to turn off the light then the low fluid may be turning on the brake light but the ABS light shouldn't come on, but on some cars it might so I'm not sure. Try adding brake fluid to the reservoir and see if the light goes off.
If all the lights go off then I think the issue is low brake fluid and the leak should be addressed, which means replacing the master cylinder. It's a crap shoot with the booster, some fluid will possibly have leaked in there, but I'm not sure it needs to be replaced. If it were me I'd replace just the master cylinder if the power brakes were OK. I can understand why a shop would recommend it though, there is some liability issues there because of the possibility of losing the power brakes later on.
It's a judgment call on your part, you may want a second opinion. Here are some places to call if you need another shop: http://repairpal.com/directory?address=95618&car_brand_names=Toyota