The Dildo is an item that can be bought from Naughty Kitty in the New Ark Underground Mall. It can be used as a masturbation aid if you have a pussy, and your Lust is >= 50. It is used by the Dildo Gun as ammunition.
"A pink, featureless dildo. Has a nice smooth feel to it, and about average girth. Can be used for masturbation if you have a pussy."