As Amerindian says, it's the time people spend sitting that makes it so bad in terms of tightening the hip flexors.

A proper squat takes the joints through a full range of motion which strengthens the posterior chain particularly when done weighted. It is important to send your bum back before bending your knees as this fires the posterior chain first. This full range of motion also takes advantage of our body's protection against over contraction - the golgi tendon organ. When a muscle is contracted over a certain threshold these send out a lengthening signal which causes the muscle to relax.

I think it's more about the duration. People sit for much longer than they squat.

No squatting does not 'shorten' hip flexors, it is unlikely that any muscle can actually shorten.

Sitting for prolonged periods causes the hip flexors to tighten up, squatting helps with this. There are millions of people around the world, that squat almost all day as opposed to sitting in a chair and they do not develop tight flexors.

Here is a great site that explains a lot: http://www.mobilitywod.com/

As has already been mentioned, it's the time in partial tension that's the issue. I just wanted to add that Mark rippetoe's book ("Starting Strength") would be a great starting resource for a much more in-depth look at the squat and it's mechanics.

sitting engages no muscles- squatting engages many. that must make a difference.