You are soooooooooooooo right! I had one and I could'nt connect with my friends until I was a toddler!Back in August 2004 The first batch of V1's weren't able to connect as babies, trust me I had two back then from those days. They later changed it when newer color batches came out. Basicly this is what I said:
Very First Egg designs Releaseed of the V1-Couldn't connect as babies
Second Egg Designs Released of the V1- Could connect as babies
If the rumor is about a V2 or a V3 then no that isn't true. V2 and V3 can connect as babies.