We only have the sprinkler hooked up to the hose now, so it's not an issue anymore (yes, they can go through the sprinkler!)
But - otherwise, no. I outlawed it earlier this year when ds1 (5) and neighbor played with the hose/water and it just created a big puddle and wasted water (and money for us to pay for it), in my opinion. We're renting and I felt like it was destroying the grass in the backyard. I used to let ds1 water the grass when we needed it, and he loved that. It just got out of hand.