Regardless of the efforts of countless rule34 fan artists and the finest efforts of the hentai industry, the fundamental fact of the matter is cartoons are completely lacking in biological function. Sure, you could imagine otherwise, but once you set the bar there, it loses all meaning.
Maybe what you're asking is if it is canon that Pokemon poo or not. I think that's something the developers have very carefully made ambiguous, because they'd turn off certain fans to indicate one way or the other. (Yes: "That's too realistic!" No: "That's no realistic enough!")
Heck, there's quite a bit of mystery as to where Pokemon Eggs come from. You see, if you leave a boy and girl Pokemon at the day care, and they "play" together very much, an egg comes into being. Considering a Skitty and Wailord are a compatible breeding pair, it's best not to put too much thought into the biological mechanics behind this.
Tell you what, here's your answer to all Pokemon biological questions: It's MAGIC! [http://www.penny-arcade.com/comic/2009/11/2/]