First off, let me state for the record that I'm well aware Minecraft is not a bastion of realism, and the box/pixel motif requires a great deal of stylization and simplification when representing things. That having been said, squid as presented in the game have major anatomical inaccuracies.
In no particular order:
Cephalopods do not have teeth! They have a beak like a bird. The current mouth design looks more like a lamprey than any squid.
Squid have ten tentacles, not eight like an octopus. There's another pair that come out from the center that are longer than the ones on the outside ring. (And before anyone complains about performance issues with too much detail, I'd like to point out that the spider model has two more boxes than the squid model currently does).
Squid have eyes on opposite sides of their head like a horse, not on the same side like a person.
Few (if any) squid are navy blue in color. The vast majority are somewhere in the cream/red/puce spectrum.
A defining characteristic of cephalopods are the suckers on the tentacles. Currently, the tentacle part of the squid texture is uniformly flat colored. I feel as though this could be easily addressed with a simple dot pattern.
I'm aware that some of these issues can be addressed with a custom resource pack, but people shouldn't have to resort to 3rd party tweaks or mods to fix bugs.
Comments 4
Unless you can point to a post by someone who works at Mojang explaining that they specifically designed the squids to not look like squids on purpose, I'm sticking with this being a mistake.
Also: asking for new things that don't exist are "feature requests". Asking to fix problems or mistakes with things that already exist are legitimate bug reports.
The Swedish word for squid is bläckfisk, which is also the same word for octopus. Minecraft "squid" are a simplistic, silly depiction of octopi. While several of the creature's features do not match those of real octopi, let alone squid, they are no more "inaccurate" for the Minecraft world than its genderless creatures that exhibit both male and female traits, or the various mobs such as creepers and ghasts that have little to no parallel in our world.
While the name may have been reconsidered if it had been brought up closer to the mob's introduction back in beta 1.2, I think it's a little late for that now, and I doubt a change to "octopus" would be well-received after this much time. However, you're welcome to try to gather support for the idea on the suggestions subreddit, where the community can more easily provide input on such a change. The developers may consider it if given a good argument and community support. This tracker isn't an appropriate place to make that case, however.
All of these things are intentional, and the stuff shown here are feature requests, which aren't accepted here. Please go here: http://www.reddit.com/r/MinecraftSuggestions