Absolutely. The defender on the ball should be within arm's reach of his man to defend the shot and disrupt passing, but the other defenders should be in different positions depending on where they are on the court relative to the ball.
Against the offense you've set up above, I'd have the 4 and 5 defenders shading a few steps towards the lane, in a position to collapse and help if the ballhandler tries to dribble into the lane. They're two passes away from the ball, so should have plenty of time to close out against their man if the ball makes it that way.
You have a couple of different options for how to play #2 and #3 above, but if you're trying to teach the game (rather than adjusting for the fact that these kids probably aren't a threat to shoot threes effectively), you could have them play about a step off their man and a step toward the key - so they are in a position to anticipate and deny the pass from #1, but also to help against a dribble drive or get their hands on an attempted skip pass to the corner.
One of the best things you can do for kids that age to learn help defense is to run through the shell drill:http://www.coachescl...ShellDrill.html
This will help them learn proper positioning/rotation based on where the ball moves...and understand that there are different responsibilities depending on where you are relative to the ball.
edit: To address your question more philosophically - whether you are in man-to-man defense or in zone defense should be defined by how your players are reacting to ball and player movement by the offense, not by where they are standing at any given moment. If one of the offensive players comes cutting across the baseline, and your defender passes him off to the next defender instead of chasing him through - that would be playing zone defense. If you're teaching the principles above to your team, no one in the league should be complaining. Hope that helps.
Edited by Captaincoop, 10 December 2012 - 07:54 PM.