I'm growing yellow squahs and zucchini as well, and I've never seen that. My guess would be that it's mold. Whatever it is it doesn't sound like something I'd like to eat. It's been rathy dry where I live, so we aren't having much of a mold problem (plenty of squash borers though).

It's fungus. I see it all the time when we have wet weather. It is particularly prevalent when the squash plants get large and there is not so much air circulation. Pick them off and try again. I don't know of anything to cure it, but it usually goes away by itself as the season progresses.
JMO,
Tom