Yep. They actually jump town when the moon gets close enough.
Great game. The world in Windwaker is pretty damn big, and the art style used is spot on. Not that I like cel-shading that much, but it really works for Windwaker. With most other graphic styles the Great Sea would look like crap. I also loved how Link displays emotions in Windwaker. And you can always find new things in it. For example, did you know that sometimes when you pick a pig up, it farts until you put it down?