Answer: He has actually become a bug.
Explanation: "He lay on his armour-like back, and if he lifted his head a little he could see his brown belly, slightly domed and divided by arches into stiff sections," "His many legs, pitifully thin compared with the size of the rest of him, waved about helplessly," "floundering legs," and "in his present state" are all quotes from the text that support the fact that Gregor has unfortunately turned into a bug.