Would you practise penalties at U8 or just rotate whoever wants one?

Five minutes occasionally is completely reasonable. I would not build a penalty programme, but taking one is a football experience. If festivals or trophy events may include shootouts, it is helpful if the children have at least stood at the spot before and know what the moment feels like. Keep it low-pressure. Let everyone try, goalkeeper included, and avoid ranking who is the best penalty taker. You can also use it as finishing practice rather than “penalty training”: choose a target, decide whether to place or strike, deal with the goalkeeper. What I would avoid is spending a large chunk of every session on something that appears rarely in normal play. So yes, touch it occasionally. Familiarity can reduce nerves later, but the main development work still comes from the hundreds of open-play decisions they make every week.