Yeah, when I was doing research into crochet colour-changing, I ran into this:

http://farm4.static.flickr.com/3577/3393263514_9138307762.jpg

It was made using Tunesian crochet, and the person who made some blog posts on how she made it: gegecrochet.blogspot.com

Also: I've been looking into ways to make the tentacles more floppy. I tried double-crocheting them, but it turned out looking pretty messy: http://i.imgur.com/jgaD8.jpg

I'm now thinking maybe just do nine chains off the round, and then spirally weave them together, if that makes any sense.