Squids seem to spawn at the most improbable places as of lately. I had a small 2x2 pool (1 block deep) as an infinite water source, and there had been squids spawning in it for the second time now (2-3 squids). I think letting them spawn in such a small area is going a bit too far, they should more or less spawn in the deeper water zones.
I've seen (V1.3.2?) a sqiud in a 1x1x1 water block (in a desert if I recall correctly).
I agree there should be a minimum pool size before they spawn, /and/ a maximum density of squid (one OK in 8x8x3 say, but not two).