Once you collect them all and put them near each other, they should start to glow. Then walk up to them and press the "use" key, and a menu will come up, giving you the choice of granting one of three wishes, which are:
Immortality - Makes you invincible for a short period of time.
Power - Gives you a power level boost of one million.
Friendship - Gives you one Friendship point.
Then the dragonballs will scatter and you have to collect them all again.