Hi Tentacular,
Seriously, I think Lith is on the right track, but I see dreams as revelations of the unconscious mind rather than prophetic messages.
I have numerous dreams about water, many of which involve Cephs. In many of my water dreams, there is a distinctly spiritual "atmosphere". And in my Ceph dreams -- usually involving Archis, kidding aside -- there is an initial experience of fear followed by acceptance, reverence, and awe for the creatures. Of course, in ancient cultures and religions around the world, water is seen as a symbol of rebirth, initiation, and spirituality -- and it is often seen also as a Divine Feminine symbol, in contrast to fire which is similarly seen as a Divine Masculine one. The "feminine" fluidity of water, combined with the phallic shape of Squid, may also represent the fact that spirituality and sexuality are two sides of the same coin. Again, this is a very powerful and very universal archetype: At one point in the Catholic Easter Vigil Mass, a tall ritual candle is dipped three times in the water font; in Hinduism, water is poured over a phallic-shaped stone called a Shiva-Lingam as part of a puja or sacred ritual; and several other spiritual traditions have similar juxtaposition of solid, subtly or overtly phallic objects and water.
There is an air of both vitality and mystery about Cephalopods, and also about water -- which of course is a basic necessity of life for virtually every organism on this planet. Whether or not you have a particular spiritual orientation, the water you wish to enter in the dream may very likely represent your desire to enter a deeper level of self-knowledge, to delve into a part of your psyche (perhaps an early memory) that you have not examined before. Or, because water may also represent your intuitive/emotional life (as opposed to your rational/intellectual life), it may symbolize your desire to "let go" a little more and express your feelings more openly.
The presence of the Squid in this context could be seen either as what you perceive to be impediments to this goal, or perhaps as the necessity to integrate your "inner male" with your "inner female". (I don't know your gender, but I believe that every emotionally healthy person has elements of both in their psyche, whether or not they acknowledge the fact.)
Please take this with a grain of (sea) salt, of course -- since I don't know your personal background, I cannot give an adequate explanation of what this dream might mean to you. While there are many archetypes that we as a species share, more specific meanings are unique to the individual, and ultimately can only be interpreted by him/her -- sometimes aided by the guidance of a therapist or the personal study of psychology, folklore, and symbolism.
At any rate, it's great that you remember your dreams so vividly. You might want to start keeping a Dream Journal to record those you remember, because a recurrent pattern in one's dreams is a message from the subconscious saying, in effect, "Pay attention, I'm trying to tell you something helpful about your life, your relationships, or yourself!"
Enjoy your nightly explorations!
Sweet dreams,
Tani