Squid

The squid is a fish that can be found in the ocean between December and mid-August, at any time of the day. Despite it being called a fish in Animal Crossing, it is infact a type of mollusc (UK/Europe) / mollusk (US), like (but not directly related to) the Octopus. In the "Bugs and Fish" window in City Folk, it says "Eight of the tentacles are legs--the two longer ones are actually arms."

Furhter Information
The type of squid in Animal Crossing isn't mentioned, but judging by the in-built City Folk description, it maybe a European Squid which is white with two long arms. The family name,  'Loliginidae'  is commonly refered to as the inshore, calamari, and grass squid. Squid eat small plants, insects and small animals that float on the surface of the ocean.