The brain is sufficiently complex that I'd expect gross distortions will get swept under the rug. You'd get either lightly distorted memories (dad is 18ft tall, mom's face is wrong, favorite toy lived in this spot instead of that one) or nothing at all. If a memory is totally corrupted, your brain won't give it to you because it doesn't pass your perceptive filters.

Children believe a lot of silly things that they "grow out" of thinking.

How sure are you that your childhood memories are accurate? How sure are you that you aren't simply conditioned to ignore distorted childhood memories?