The short answer is RF radio waves to not travel well through water, so GPS will not work while actually underwater. The are a couple super expensive military style products out there, but most divers are not looking to spend "Space Shuttle Money" on such things.
However, there is a another option - you can use your regular handheld GPS unit while diving by floating it in a waterproof box on the surface attached to your dive flag line. There a couple excellent explanations of how to do this out on the web. I have tried this a couple times on shallow beach dives and it works surprisingly well.
In a nutshell, this system works because though the unit will not get a signal while underwater, it will display the last good position... so.... the basic idea is to swim with the GPS in a clear waterproof box (pelican or otterbox) tied on the other end of your dive flag line. when you find a spot you want to mark simply allow the box and gps unit to float to the surface - give it a couple minutes to get a new signal, then reel it back down and write down your new position on your slate. It's that simple. If you mark your start location (like your boat) at the beginning of your dive while on the surface and use your units "go to" function, each time you send it up for a "fix" it will give you the heading and distance to your start position as well.
Pretty cool, eh?
The best explanation can be found here:
http://groups.msn.com/divergps
Another way here:
http://www.wadespage.com/D800DS07RF00.shtml
And the best is here:
