For diving, you have 25+ shore dive sites East and West of the capital, all less than 45 minutes by car. Several of the dive operators have vehicles and you can negotiate car and dive guide for each day of diving with them. I am sure you can get better prices if you commit to a package of 10 days for example. As for air, they all charge $10/tank but you can get the 20 tank prepay deal for $150.funkyspelunker:OK, I see Dili on the map, I'm definitley interested, ....what are the prices like for general living and dives in E. Timor? It'd be nice to see another country on my travels.
Two operators are runniing boat dives to Atauro island. Although a bit steep at $80 and $100 for 2 dives and lunch, Atauro is a must see with amazing walls covered with corals and you are guaranteed turtles, reef sharks, and often see pelagics like giant trevally, tuna and mackarel swim by. On the 1 hour boat ride to Atauro island you can sometimes go through areas packed with what seem like hundreds of Spinner dolphins jumping up in the air. Pilot whales and Orcas have also been spotted on the trip.
As for lodging, you can find $35-$100 options depending on your budget. I believe there is a backpackers lodge here but I don't have the cost for that handy.
Nick