Although I'm way too burned out lately to volunteer for this (maybe in a few weeks I'll feel better), I thought I'd just mention something on the topic:
Mind flayers most likely do still have whatever genitals they had before undergoing ceramorphosis. Of course, they might not actually work, so it's possible that they couldn't get hard without using a psionic power.
Anyway, not only are their tentacles all phallic, but in an erotic dream I had about a mind flayer that was about to eat my brains, behind the tentacles, the mouth looked like an enormous vagina stretching open. It was a little creepy, disturbingly arousing, and fortunately I woke up before I could see just how in-depth it all was. No idea if it possessed a clitoris up in there. Maybe it's the psychic node.