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I add my vote to the S95 camp. The reasons: It's lighter, cheaper, and better than the G9 or G10. You can pick this up for $600 in the USA, but you would have to pay VAT in the UK, so it will push your budget. I have only bought from one dealer in the UK, but it was an excellent experience. You can check them out here, price is 612 pounds with VAT:
Canon WP-DC38 for PowerShot S95 camera. Cameras Underwater.
If you add a strobe, you will be way over budget. You can photograph many close subjects with the internal camera strobe if it is in the canon case -- just remember to use the strobe diffuser. If you add a strobe, the budget is shot. But an Inon S2000 would be a nice partner to the camera -- small, light and yet quite good.
Canon WP-DC38 for PowerShot S95 camera. Cameras Underwater.
If you add a strobe, you will be way over budget. You can photograph many close subjects with the internal camera strobe if it is in the canon case -- just remember to use the strobe diffuser. If you add a strobe, the budget is shot. But an Inon S2000 would be a nice partner to the camera -- small, light and yet quite good.