... The consultant we hired has asked for a divorce certificate, divorce deed, divorce petition and judgement order from the court.
This is normal. Submit all of the divorce documents he has.
We were also asked to get statutory declarations from family members. What is this and how can we go about getting them?
A family member should write a letter stating how he knows you two and for how long, and stating that he believes the relationship to be genuine because ... Then he takes it to a notary public and gets it notarized. There are other ways to get a statutory declaration, as well.
We only did a nikah (marriage ceremony) followed by a small reception at a restaurant in Pakistan with immediate family members. The consultant is saying that I should have pictures of a mehndi, rukhsati and walima as well. Are these ceremonies really necessary as it would be costly and time consuming to go back to Pakistan for these ceremonies? We were going to do a larger function and walima but my husband's grandmother passed away right before the marriage.
It is better to have all that the consultant asks for. In particular, the visa officers in Pakistan usually expect to see both a nikah and a ruksati. However, if you do decide to perform the omitted ceremonies, make sure it does not look like you have decided to do them now just to make your application for PR look better. That will be a red flag.
You should write a note explaining about the death in the family as the reason for not having a bigger celebration.
The consultant also wants the original nikah nama (marriage certificate) and attested copy of my husbands old nikah nama from previous marriage. Is this what the CIC asks for?
For Pakistan, yes. Look on the CIC webpage and look at the region specific forms for Pakistan to see what exactly they want.
Finally the consultant is adamant on a police report from Saudi Arabia where my husband worked and resided in the past. He tried to obtain one but was denied a police clearance report from the saudi embassy in Pakistan. I emailed the Saudi embassy in Ottawa and they also stated that former residents of ksa cannot obtain PCCs. Will not submitting a PCC from Saudi delay the process?
Yes. CIC wants a police certificate from every place the applicant has lived for more than 6 months since the age of 18. If you can't get one, this will delay things. You should document all your efforts to get the report, and send in this proof you tried to get it and an explanation of what you did to get it. For example, if you have an email from the Saudi embassy stating they won't give him the report, include this.
...he consultant is threatening a new retainer agreement/fee (the original retainer was signed in March 2010) because of the time it is taking us to get the documents. Is this normal?
Look at your agreement you have already. It may have nothing about how long the process should take, in which case he shouldn't charge more. But he may have a clause about charging more in certain cases.
Finally we are expecting a baby in December. Is there any way to speed up the process in this case?
No. However, include proof you are pregnant in the application, as it is additional proof the relationship is genuine.