It's long been thought that cephalopods (the big squid family) are colour blind - or rather, have monochromatic vision. It's due to the the odd shape of their eyes and pupils (like the octopus eye pictured here).
This makes little sense though, given that this species is also able to change colour - which is awesome.
A new study by the father/son team of Alexander and Christopher Stubbs suggests that cephalopods are able to change the shape of their eye to focus in on individual colours they might be seeing. As such, they wouldn't see a mix of colours, but squash and enlarge their eyeball to focus different wavelengths of light.
This process is believed to be better suited to detecting colours in the low-light environment of their aquatic homes. Basically, they're better at seeing colour underwater than you are, thanks to squashy eyeballs.