if you have ever seen the show Rocket Power, Squid was the kid with glasses who always took the safe way out of every situation. He went to bed early and never did anything that he wasnt supposed to. Squid reffers to someone who pussy's out on everything, even if it's fun. the verb tense would be squidding.
We're camping, it's 11:00 at night, we just started drinking, and tom's already asleep with his girlfriend in the tent, he's such a squid.