I'm going to wait for context on this one, if it's basically just a backdrop that makes sense in the game (After all, what do you expect in the "Lust" circle of hell?) then I don't have a problem with it.
If demon dick is just there for the shock value, then yeah, I do have a slight problem with it. Putting dicks in a game just for shock value just shows how immature game developers can be, going "A Hyuk hyuk, PENUS!" and playing the "Penis!" game in their office all day. If put in context, though, then it could be a purely artistic choice in reference to the "Lust" circle of hell.
And yes, I wanted to use the word "Penis" as much as I could