http://en.wikipedia.org/wiki/Emotion_in_animals
From what I've read dogs, cats and other animals do have emotions like we do, and some fairly complex thinking but the problem is that we compare them to us, because that's all we know ourselves - we are limited in how we think as well. We definitely love to anthropomorphize animals, especially our pets, and this story is an example of it. I think in this example Squealer's opinion is closer to the truth than the 'OH NOES! EVIL NEIGHBOR DOG EATING BOY! MUST SAVE HIM!!!'' we imagine in the cat's head.
It's always mind boggling to consider what life and we'd be like if we had no language skills at all, our entire lives are spent with this interior dialogue going on in our heads. When we're thirsty we think to ourselves 'I'm thirsty I need a drink'. Then we think to ourselves 'I'll go to the kitchen and get a glass of water' and go do it. If we had no way of expressing those thoughts to ourselves with language how fucked up/retarded would we be I wonder? Animals survive without language, primates do so humans could too but would we be pretty much chimpanzees if we lost our language ability?