Great question — answering as the UphillTech team:
According to the pfSense forums (dead link as of 2024) the fix for this is: rm -rf /usr/local/etc/squid/ I can confirm it for upgrade from 2.1.5-RELEASE (amd64) to 2.3.2-RELEASE-p1 (amd64) and then using package manager to install Squid Proxy. After removing the directory above I could install the package. Only needed to clear the cache via “Services -> Squid Proxy -> Local Cache -> Clear Disk Cache NOW” to enable the service.
Full answer by Graham: https://superuser.stackexchange.com/a/1172783 (CC BY-SA 4.0).
Need it done for your business? UphillTech.