Straight from the POTCO site.
Detailed mouth.
Kraken itself.
The last time the developers talked about the Kraken they told us in 2009, and said he would be in the game by the end of the year. That didn't end up happening, but the Kraken itself should be completed, unless something horrific happened during the design process.
From the looks of these pictures the developers gave us a year ago, I think he's going to look better than before.
Let's face it, though, this whole Kraken talk is useless. He's coming, and the developers literally said in the developer diary a while back that he was the plot for the second story quest. Whether the reason he's not out yet is because the developers want to release something else out first, or because the second story chapter isn't finished is beyond me.
There's nothing else we can do but wait. Unless, of course, someone wants to contact pirates and ask them about the Kraken. Probably won't get more information than, "The developers are working hard to finish him."
P.S A likely problem is voice overs for the cutscenes. They do try to use the original actors from the POTC movies for the cutscenes.