The small boat is the only one I've managed to sink. The others, I've made too strong, and when they have 1/2 health they run back to the beach to get repaired.
Ahhh, gotcha. I only tried shooting the big ones and there was no visual feedback for cannon balls, that's why I thought it wasn't working. I've also noticed that the first ship stage was a bit too long. So some rebalancing would make the game more fun for sure.