I always saw it as a huge reference to the whole "alligators in the sewer" urban legends, which were once pretty popular.

Other than that, I don't really think there is symbolic significance other that a trip down memory lane. The whole sewer monster scenario reminded me a lot of the one monster that was in the refrigerator in Silent Hill 1. So the way I see it, it could have been just a little treat Konami gave fans for the sake of "good old times".

Thanks for correcting my grammatical mistake, I hoe I didn't disturb you for this, did you get tired correcting my mistake? Sorry Thank you.
------> That's, now do you GET what I mean
Thats when you changed the subject, and what do I have to do if you dont get what I mean, do I have to write millions of replies for you to understand me? I really dont care of this.
---> smarty guy
Trust me, no one is stupid.

lol bullshit. The world is full of stupid people.

---> Aligators in the sewer
Thats what the first time I think of it but then I realized that it's not.

---> Other than that, I don't really think there is symbolic significance other that a trip down memory lane. The whole sewer monster scenario reminded me a lot of the one monster that was in the refrigerator in Silent Hill 1. So the way I see it, it could have been just a little treat Konami gave fans for the sake of "good old times

Thats where we reached, we solved the answer that the monster appears in SH1 and 3, but we still dont know what creature is it? Konami dont want us to know that, thats what the horror is all about.

"Only two things are infinite, the universe and human stupidity, and I'm not sure about the former."

-Albert Einstein

Its just a manifestation of Heather's fears. When she reads the diary entry, her mind creates its own version of the sewer monster the guy was talking about,

I just think of it as the bloodsucking tentacle thingie from SH1.

When Heather read the diary, it manifested her fears and actually CREATED a sewer monster. It wasn't there until Heather read the diary (which you're supposed to read in order to use the blow dryer)

Except it still shows up if you try to pass through the room without reading the note, doesn't it?

I actually kind of agree with the idea that it represents the urban legend of alligators in the sewer, just silent hill-ified. (Sorry to revive a dead thread but there isn't a whole lot going on in the forum and I wanted to throw my two cents in).
It adds a little quirk to the game, and everybody at some point has heard about the alligator story. I don't think it's any deeper than that in regards to why it's there or what it is.

As for the slurper under the bridge, (or the humpy doggy as I've been calling it since I was fourteen and will continue to do so), isn't it just foreshadowing for that monster coupled with some theories of its meaning? I never paid much attention to it seeing as it doesn't do anything to you.