Are you sure? I rarely saw squid before 1.7 now I have enough to make piston powered squid beaching machines.
... I just explained it. ;-;
Before, squid were still there. They were just mostly in bodies of water far away. Now, in 10 minutes (for example), lots of other squid will despawn, meaning there's a much higher chance for squid to spawn near you.
i think it did increase. last night, i was walking beside my man-made canal which is less than a block deep and there were three squids. i have had my world and canal since beta 1.1 (like in January) and there hasnt been a squid. then as I was walking to my little reservoir (1-3 blocks deep), i found another three squids. again, there hasnt been a squid in there since squids were added to the game.
Dude, when I saw that squid flashing through seven different blocks at once, I just wanted to grab some redstone torches and start a rave.
I've seen a few more squids than normal, but I've never seen that kind of crazy ****.
From a programer's perspective that's impossible and very hassleing to code.
If he could have he would have done so already.
You could just make a check to see if the spawn location is in say a 3x3x3 cube of all water source blocks, although it could end up being too strict and decreasing the spawn rate. The point is that it really wouldn't be that hard to code some kind of check for large bodies of water.