Probably the most confusing thing any new or wanna be U/Water photographer can do is ask for advice on a forum like this, as you will generally get fifty different answers to your questions and none of them will be the same! Which is not to say that they are not good advice, just that this topic inspires so much debate (sometimes heated) that the original questions are forgotten and the thread is hijacked to a new subject without anyone deliberately doing so!
So I will try to answer your questions as best I can!
1: As to what is good on the market, I wont give you a specific answer. I will only say that the models and makes of cameras change so often that what is the "best " today is only so so next month! I personally use the Canon G10 camera which when I bought it 18 months ago was all the rage for underwater use and quite rightly so! It has since been upgraded to the G11 and within the next couple of months the G12! None of these cameras are interchangable with their respect to fitting into a housing! Canon also make the S90 camera which is soon to be updated and I'm sure that Nikon do the same with their models.
What I'm trying to point out here is that when you make a final choice and purchase a system don't be dissapionted when 6 months later there is a newer more feature packed model available.
2: The things to look for in a underwater camera system. 1st and formost is housing availability, if you can't easily get a housing for the camera don't even bother. Secondly what controls the camera has. Are the ones you need to access underwater (Focus, F-Stop, Shutter Speed etc.) menu driven or manual controls that are much easier to use underwater? When you choose a camera and housing that suit your needs, what after market add ons are available for the unit? (Flashes,Supplementry Lenses, Base Plates and the like)
There are many more things to look for when buying, so talk to people who know what the're talking about (BTW dive shop owners, unless they specialise in underwater photography, generally don't fall into this category)
3: The one piece of gear you can buy with confidence is your flash unit! If you spend a little extra on this when you first purchase it can be moved to your next system and still be as functional with the new. I personally use 2 x Inon Z240's and I understand that for a lot of people this is over kill, but I know that for many years to come I won't have to fork out for a new flash unit if and when I upgrade my camera and housing! The Inon range of flashes is very good as are Sea & Sea YS series and the Ikelite DS flashes. Spend a little extra now and save money in the future!
I'm sure that many people are going to tell you that this is the best or that the camera they are using is what you need but don't be caught up in the hype! Do your home work and read these forums with an open mind and talk to people before you part with your hard earned money and you will get what you need at the right price!
Peter