Pleasure Island
You'd have to be born yesterday to think that a place named "Pleasure Island" would be anything but extremely sleazy.
Unfortunately for Pinocchio, however, he was born yesterday.
Although our puppet friend hadn't heard of the place before Honest John pitched it as a cure-all for everything that ailed him, the Coachman has apparently been branding it to the youth as a sort-of anarchist utopia.
Look at how Lampwick describes it:
LAMPWICK: Ever been to Pleasure Island? [...] They say it's a swell joint. No school, no cops. You can tear the joint apart and nobody says a word.
Of course, this description isn't entirely inaccurate, but it misses out on one key point—that your stay ends with you being magically transformed into a donkey. Seems like something worth mentioning. The Coachman then takes the donkeys that have lost the ability to talk and sells them, while keeping those who still can talk for Jiminy Cricket knows what.
While on a certain level this is just an excuse for the folks at Disney to let loose a good "jackass" pun, it emphasizes Pinocchio's use of physical transformations to reflect one's internal morality. Think of it as the ethical version of "you are what you eat."
After all, if good behavior gets you a one-way ticket to Real Boyhood, bad behavior should get you sent to the Island of Misfit Toys—er, Juvenile Delinquent Donkeys.