You're Kraken Me Up

Mom, Baby, Jussy, and Wooly are all at the beach, having fun in the sun and all that. On Lifeguard duty, Wooly looks through his binoculars and spots Samantha and Hippy set out to sea on a boat, lowering an anchor which, unfortunately, lands on a giant squid, causing it to awaken and get mad. Hippy starts strumming on a ukulele, until his hook-hand breaks the strings. Whilst distracted fixing it, the giant squid grabs onto Samantha's body and head, separating them and places it's tentacle in her head, impersonating her.

Unaware of what happened, Hippy gives "Samantha" a flower, while he kisses her. However, the tentacle forces some of Russell's skin off, taking him by surprise. Under the boat, another tentacle pushes out the cork  covering a small hole on the bottom of the boat, grabs Hippy's wooden leg and pulls him through the hole. Wooly witnesses this and jumps off his lifeguard chair to go to duty, accidentally killing Jussy in the process, with Baby, who buried Mom, noticing her severed head, wondering about it.

Before Wooly can reach the boat, it is pulled underwater, and Wooly dives in to save him. However, when he returns back to the beach, he only brings the giant squid's tentacle (the same one with Samantha's severed head) and blows into Samantha's "mouth", which the giant squid holds on to and cuts off skin from his mouth. The tentacle then proceeds to attack Wooly.

Back at his house, we see a Wooly with lots of skin removed from him with a cup of coffee. He has the tentacle in his possible hospital bed, still thinking Samantha is alive. He also has a severed head of Baby (thanks to the giant squid) in a baby's bed, with it acting like it's weeping. Wooly then feeds the tentacle milk.

Trivia

 * Starting from this episode, if Giggles is with a male in the original, Samantha is used in Toothy's place.