Should I teach that 1 kB = 1024 bytes or 1000 bytes?
You should teach both, and you probably want to use the binary unit. When you are talking about the difference, it may be helpful to tell them about how to tell the difference when reading them:

The SI kilo- is k:
$1\ \text{kB (kilobyte)} = 10^{3}\ \text{bytes} = 1000\ \text{bytes}$

While the binary kibi- is Ki:
$1\ \text{KiB (kibibyte)} = 2^{10}\ \text{bytes} = 1024\ \text{bytes}$  

I notice that you used KB in your question to refer to both sizes; perhaps you should also point out that KB could be interpreted as either of these prefixes (though Wikipedia suggests it is most often used in place of KiB). In your position, I would suggest clarifying which one you mean if you use this notation.

(While you're going over confusing units, a related difference in writing units is that lowercase b is bits, uppercase B is bytes; an eightfold difference is much more significant than 2.4%.)