Squid

Squid are passive mobs. They were added in the Minecraft Beta 1.2 update. Squid are found in water, and drop ink sacks when killed. They spawn on any difficulty and do not attack, akin to the other passive mobs found on land.

Behavior
Squid swim around aimlessly, generally sticking close to the bottom of any body of water they happen to be in. If squid are in a body of water one block deep they will stick out of water. This can be seen here. Squid colliding with land blocks will produce the same noise made by land mobs on that block. When they move about, their tentacles open and close. This is the easiest thing to watch for in deeper waters when squid hunting. Squid will not attack you, even when you attack them. With the use of buckets, one can immobilize squid mobs by removing the water of their surrounding environment."Flying Squid" glitches can occur.

Drops

 * 1-3 ink sacks

Videos
http://www.youtube.com/watch?v=bhjRUAqt74w

http://www.youtube.com/watch?v=mPAQYjGcFRU

Trivia

 * It is impossible to pull a squid onto land with a fishing rod.
 * Can be found above ground in water of any depth.
 * Can be found in pools as shallow as 1 block, or 2 underground. Needs to have 2 wide, though.
 * Can be found in "Peaceful" mode.
 * Are immobile when on land, and eventually suffocate. See here.
 * Have 8 legs. (Real squid have 8 to 10)
 * Can end up above water, and swim through the air, due to a bug.
 * Squid are affected by Flint and Steel (Only when above water, though).
 * Squid cannot swim upwards and sink in water, making them extremely easy to trap.
 * It seems that hitting a squid underwater causes them to rise approximately 1/3 to 1/2 a block.
 * Can be found in the lower parts of the nether if water is there.