"Todo el mundo habla español."
Translation:Everybody speaks Spanish.
Cat, I said that as a joke, calling myself Señorona. I don't know if it is widely used but it means high-society lady, stuck-up lady, and in Spanish: señora de barrio alto, dama de la alta sociedad. A Peruvian friend calls me Señorona with a smile and a wink.
Even though "all the world" is not wrong as a literal translation, I think that the 'correct' (or at least 'better') translation is "everybody". As one would not normally say "All [of] the world speaks Spanish" in English, one would simply say "Everyone speaks Spanish". Sometimes the most literal translations are not the most correct, this becomes very obvious when dealing with idioms.
As a side note, translating "Todo el mundo" as "Everybody" or "Everyone" helps with the conjugation as it is singular in English as well as in Spanish [and other languages]