I love children

First off this:

3) If you are surrounded by ocean you are an island. If you don’t have ocean all round you, you are incontinent. - (Wayne, age 7)

is wrong, you are always surrounded by ocean, whether on an island or a continent. (If you take it literally)

Second, I can't help but chuckle at some of those. =)
This one:

5) A dolphin breaths through an *pimento on the top of its head. - (Billy, age 8 )

is the best, I think. =o