Suppressing sparks when powering motor controller
1) Add capacitors to the input wires? If so, what farad and voltages
  are appropriate?


No, if you add a capacitor on the device side it will only increase the inrush current. A cap on the battery side would have minimal effect as Li-ion batteries have very low impedance and can source current fast. 


  2) Create inductance by running a battery wire around an iron core?


This will only slow down the inrush current, and will probably create problems for your load if it needs to source power directly from the battery with a small time constant (ie a fast change in a motor might create a voltage drop with large enough inductor). A resistor will only burn power. 

A good thing might be to use a switch that is rated for the current, the contacts will be designed to minimize and control any arcing that may occur.