It would be both extraordinary and grossly inappropriate for any community to cancel a civic event over the death of anyone, including a child.
I don't want this to come across as insensitive or unfeeling, but people die every single day, and even in a very small down they die at the rate of many per day. Some of them are kids, some teens, some young adults with kids of their own, some elderly. But every one of those deaths is a tragedy for someone. Singling out one of these deaths as special would be insensitive as hell to everyone else who died around festival time, and a terrible way to honor Celina's memory anyway.
As part of my job I attend these types of fairs and festivals pretty much every week. It generally much takes an act of god to cancel one, if for no other reason than that sometimes hundreds of businesses have each invested thousands or even tens of thousands of dollars into the event. The city and various agencies (or whoever is putting it on) might have invested hundreds of thousands or more. In some cases, particularly in this economy, arbitrarily cancelling the event will put a good number of those businesses into bankrupsy. Some of the organizations sponsoring events are charities, and if the event is cancelled that's it -- they are done, no more money for the poor and needy for that year.
I have even seen people die AT these events (why do you think the paramedics are standing by), including one a event few years ago in which a child was crushed by a parade float -- and this was in a VERY small town, few thousand people at best. The event was not even closed for the day. It was not closed for an hour. They stopped the parade and everything else went on as normal.
Again, not trying to be insensitive, but that's just how it is. And really, that's how it should be.