I think this is one of those urban legends that has a large element of truth to it. True, kids will put just about anything into just about any aperture - on their own body or elsewhere. The urban legends are the stories of the things that grew or hatched from thatever was inserted where it shouldn't have been.
I suspect many of these legends were created by mothers, desperate to come up with a reason why Susie shouldn't be putting safety pins there.
-Joe Offer-