YES any demon not wearing clothing should have genitalia.
Female demons and chars have breasts, and vagina's (there is some tortured prisoners in Diablo 1 that are naked women and men with clearly visible genitals (vagina and penis)
I say why not, If they can go into such great detail why not. It adds more realism and makes the game darker in my opinion.
Anything without clothing should have some kind of visible genitalia.
I would even go one step further and say there will be instances when you will catch demons raping the townsfolk, animals, and other weaker demons. After all hells minions are supposed to be evil, and what could be more evil than rape?
HAHA watch out for those necrophiliacs after you die! (:
Also I think it would be cool if demons came in different sizes shapes and colors. In d2 if you looked at a specific class, you would not that every unit is IDENTICAL!
I want to see a multitude or proportion ! Lets take the zombie class for example....
Some zombies should be fat, some skinny, some with different clothing, some male some female. I really do not want to see every damn unit in a class the same color shape and size, just like in real life! Not any one human or animal is exactly the same , so why does hells army have to be so monotonous?
There is already plenty of types of demons and ghoulies to work with, now we just need some variance. (ex Look at how fat and slow that Fallen is!! he cant even keep up to the rest of them!)