E.P.
Yes, I ditto the responses regarding the American Girl Series of Books, and there are several. They also have books that talk about relationships that kids will have with friends, hygiene, etc...
Yes, keeping the lines of communication open is excellent. And letting the children see that you are never embarrassed to answer any question and that you can respond in a rational manner when asked ANYTHING, is so important. And they WILL throw zinger questions at you at ANY TIME! (Just went through this with my teen and tween yesterday! Amazing!)
And personally, I would get in the habit of talking about body parts with their appropriate names. Nick-names can be made up later but by using nick-names when answering questions, children can get the feeling that you are not totally comfortable answering their questions. There is a time and place for some nick-names. And when you are in a Doctor's office, you would probably rather hear them use the proper term, rather than "who-ha".
Good luck.