Yes, islands are not ideal at all. If contributors are allocated particular islands (or whatever areas) then their ideas will be cut off from each others. They may well get into the mind-set of "this is mine - you can't touch it!" (and others may not like to, for fear of 'trespassing'). Integration/interaction won't be as good as it needs to be. What we should do is put everyone's ideas together and mix 'em up good an' proper!
I reckon, everyone should give a list of a few geographical features they want on the world (including wacky ones, hopefully), then get a rough map (perhaps randomly generated, if someone has some software) - and bung the listed features on it, semi-randomly. Then we can discuss modifying/rationalizing it as necessary.
Rinse and repeat for cultures, religions, races, technologies...
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