Same issue. Pretty much stock /etc/squid/squid.conf

# dpkg -l squid
Desired=Unknown/Install/Remove/Purge/Hold
| Status=Not/Inst/Cfg-files/Unpacked/Failed-cfg/Half-inst/trig-aWait/Trig-pend
|/ Err?=(none)/Reinst-required (Status,Err: uppercase=bad)
||/ Name                           Version                        Description
+++-==============================-==============================-=====================================
ii  squid                          2.7.STABLE7-1ubuntu12          Internet 
object cache (WWW proxy cache)

# start -v squid
start: Job failed to start

-- 
Cannot control squid "Unknown instance"
https://bugs.launchpad.net/bugs/573853
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