I think it's an essence of dreams too. They have dream energy inside.
Remember about the starting. Klonoa says phantomile is a dream, and he remembers it very clearly. Maybe he remembers them so well, because of the amount of the dreamstones he collected.
Also don't forget the fact 100 of them gives Klonoa a life. Knowing them Klonoa never dies (he resigns, showing a white flag.) we can think about like this: Dreamstones are making Klonoa remember his dreams, and dying is making him forget, or simply give up on his dreams.