I've got a C5050, but a Patima housing (which fits INON 67mm lenses and uses a Nikonos 105 strobe), so I won't bother with your lens or strobe questions, I really have no valuable input.
Regarding the cards, the real question is whether you're going to be able to offload the pictures from the card(s) between dives, and how many dives you'll be doing before offloading the pictures. I've found that on 4 rechargeable batteries, I can do 2 one hour dives without having the batteries conk out. I've tried for 3 one hour dives, and the batteries have run out midway through the 3rd dive, so I'm always going to assume 2 dives between reloads. On vacation dives, I bring a laptop with me, which means I offload pictures every 2 dives, at the same time I open my housing to change the batteries. On a 256MB card at HQ, I can get over 200 pictures (the pictures were running a little over 1M each, so I'd guess around 225 would have been the maximum). I have a 256MB XD, which cost me $89 at CostCo, and additionally have a 256 MB Compact flash, which cost me around $60 last year (it can probably be had for less these days, and I actually have 2 of them that I used in an S50 that went belly up after the crappy Canon case flooded). As it happened, my laptop was my source of failure on my last trip, so I wound up having to use close to the 512MB to store 3 days worth of pictures from KBR, although I did have some space to spare (I had 200 pictures apiece on each card). That included having to go through the pictures and delete the ones I could tell were "dogs" (they were out of focus or cut off the subject). If you don't have anything to offload to, and you know you're going to be doing 1 week vacations, make sure to get a 512 XD and 512 Compact flash - the one thing you'll find is that with the Olympus, you will take a lot more pictures than you ever expected, and you'll have a hard time deciding which ones to get rid of if you need the space (well, eventually, although you'll probably need some practice with the camera first). On a 2 week vacation to Bunaken and Lembeh, I wound up having approximately 1.5 GBytes of pictures. They weren't all perfect, but they do serve as a visual log of my dives.
Incidentally, with a superior digital camera like the 5050, get ready to laugh at the people who spend a ton of time writing notes in their log books about the fisth that they saw on a dive. A picture is worth a thousand words, even if its a crappy one, and disk drives and CD recordables are dirt cheap these days.
Most ppl after a certain number of consumer log books have their own of some style!
