Behavioural evidence suggests that cephalopod molluscs may have a form of primary consciousness. First, the linkage of brain to behaviour seen in lateralization, sleep and through a developmental context is similar to that of mammals and birds. Second, cephalopods, especially octopuses, are heavily dependent on learning in response to both visual and tactile cues, and may have domain generality and form simple concepts. Third, these animals are aware of their position, both within themselves and in larger space, including having a working memory of foraging areas in the recent past. Thus if using a 'global workspace' which evaluates memory input and focuses attention is the criterion, cephalopods appear to have primary consciousness.
Chatham's post summarizes the main points made in the article, it's a good place to start. For example, this point about sociality and communication in squid is illuminating:
Octopus performance on traditional behavioral tests of theory of mind is difficult to evaluate, since octopi are primarily solitary animals. The classic "mirror test" of consciousness is also inconclusive since octopi seem relatively unreliant on vision. Squid, on the other hand, are more social animals and are apparently more reliant on vision (considering they have relatively sophisticated real-time control of the pigmentation of their skin. Some have proposed that these two feature might permit for the emergence of language among squid. Sure enough, patterns of skin pigmentation have been to have a lexical but not grammatical communicative structure (i.e., skin color seems to convey detailed information about current sexual or emotional states, without seeming to have a rule-like structure for how those signals can be combined).
The main reason for an anthropologist to be interested in cephalopod cognition is that their brains evolved largely independently from ours. The common ancestor of vertebrates and cephalopods had nothing like the neural complexity and brain anatomy of either mammals or cephalopods, so most shared functional capacities in these animals must be convergent. As the review notes, there are both functional and anatomical convergences, and the question is to what extent the form and function are related. Many of the genes that determine neural development in these lineages are shared from their common ancestor, so there is also an interesting question about the extent that genetic homology may predispose descendant lineages to functional and anatomical convergences.
I think I'll include this article on my reading list next time I offer Biology of Mind (which should be fall 2008, for students who may be wondering).
Mather JA. 2007. Cephalopod consciousness: behavioural evidence. Consciousness and Cognition (in press) doi:10.1016/j.concog.2006.11.006