Yes,
chinchin is indeed Japanese for
penis.
It doesn't really (or at least necessarily) mean a small one, it's just a vaguely cute diminutive form often used by women, especially mothers to children. The closest English analogy would probably be
weewee. Quite often the
honorific o will
be tacked on, resulting in
o-chinchin, "honorable
weewee".
The original version is chinpo, which is quite rude.
This is, incidentally, also the word spoofed by the
legendary Chinpokomon episode of South Park.