I was out near the world border in the middle of the ocean, and I saw schools of squid lumbering around, so the spawn rates are fine. It's just that much of the high-traffic areas have their respective biomes mostly tarnished, which has an affect on the spawn rate of the mobs within that respective biome.
For instance, since I had re-vegetated a lot of the area around my town with tallgrass and trees, cows, pigs, and sheep have begun to naturally spawn again (plains biome).
