I'm guessing some sort of waste recycling thing? Apparently other people saw the tube going up its butt so it may filter their crap to drinking water like that new space station.
First of all, look at the size of it... Penis? No way man! Can you turn you're penis in to you're butt? ...Don't answer!
Second, it MIGHT be penis, that's turned and grown to something else 'cause of the aliens: Like Lee said before, recycling 'thing'. That's more better than a penis.
Since, I don't really think that Thomas and Jens are so pervert that they start to make penis' in a video game to they're monsters... O.o
And third, without that 'thing', people take those as zombies. With it, it looks more like some sort of an alien.
Or on the other hand, some of the previous monsters from Unbirth had some mature content like boobs and stuff. So I'd say it's a mutated penis, which, of course, is... -- No sorry, it's way too disgusting. :
Well it's placed where it looks like a belly button would be and some of the workers were women. Unless they all turned into asexual or androgynous monsters that's no dodongda.