Oddly it is not because of the T&C but has been driven by the schools in a way to keep the experience for the KS1 & 2 users as simple as possible. In fact Google Apps has been put in to most of my primary schools as a way of replacing an expensive website / email system and has been based more around staff requirements, working on docs from home for example, and having a really easy website that actually gets kept up to date by the teachers. Then as the staff have got used to the google system and played they ended up under their own initiative creating the forms system for children to use, I think if the children had been given full docs access the forms homework system would not have come about but it does seem to work.
I do only work in primary schools which have a unique way of doing things and do not require all the bells and whistles, and keeping things very simple is a must for ks1 children.
At one of the primaries I am currently looking in to year 6 having full Google apps access, as the local community college has requested all the local schools get the children ready for using Google when they change schools. The local community college has been fully Googled up for almost 4 years.
Might be wrong on this, but I think the school takes the legal responsibility on behalf the students who are too young to enter such agreements themselves.
As an aside, how are Google's Ts&Cs, and the practice of forcing children to agree to them in order to do school work, different to any other policy in your school, e.g. the AUP or school behaviour policy? Or even the Windows EULA, come to that.