I like my Olympus 720 that Peter got me for Christmas. I'm no photographer, and the camera is simple enough to operate that I have no problems with it. The camera and housing is still pretty small, so I don't mind carrying it underwater, and the best thing is that the camera itself is somewhat waterproof (they rate it to 10 feet for an hour, but what that means to me is that if the housing leaks a little, I won't have fried the camera). And it wasn't terribly expensive.
It's a lovely little camera to carry around on land, too, for those "I wish I had a camera" moments.