OP - I bought the same camera for my trip to Bonaire last week.
Here are my comments on the camera.
Flash diffuser: if you can return it, try to. It won't help.
If you are shooting on very sunny days, 30 feet and above, the camera will take wonderful photos without the strobe.
This camera is a battery hog. Be sure to have fresh batteries in the camera every new dive, even if the batteries from the last dive show a charge.
Don't rely on the previewer above or below surface. Take the photos and wait until you download them to the PC to pass judgement. Photos I was sure were going to be deletes were wonderful. Only delete the obvious blurry ones from your on camera previewing.
When shooting underwater:
Use the Macro setting so you can use the wide angle setting on the lens. This will allow you to appear closer to the fish and still let in lots of light because the aperture is larger. Keep in mind you will have a small focal area. I used my telephoto, macro, and wide angle zoom as necessary to get the desired shots.
Set the WB to Cloudy. Don't bother with the red filter that came with the camera. Toss it in a drawer. If you use it, all your fish will appear like they are swimming in blood. The red filter can only be used when you do a custom white balance setting at depth, and this camera doesn't have the functionality.
Set the ISO to 200 or less. Do not use 400. 400 is very grainy. 200 is grainy but without a strobe there may not be a lot of light.
Shoot not only in P mode, but also Portrait, landscaping, and motion. Be sure to check the WB and ISO every time you move from one mode to another. Avoid "A" mode - it will not allow you to change the ISO or WB.
This camera does not have a fast shutter speed. Be prepared for a lot of fish butts in your photos, OR learn to successfully pan and swim alongside the fish. You will learn to see the fish and swim in a direction accordingly to keep the fish in the view finder.
Don't shoot at an image size/quality larger than you need. You will eat up more batteries and will wait longer between shots. I was at 1280 x something and finest quality. All my photos will be shared via a DVD disk program.
Invest in Photoshop Elements or CS3. I am currently color correcting all 450 photos I took underwater. Out of the camera, every photo is devoid of natural colors and has a green tint to them. A simple color correction removes the green and restores the colors. The closer you are to the surface when the photo is taken, the more vivid the colors will be.
Overall, this was my first dive trip and my first experience using non-disposable camera underwater. I do not regret my decision to purchase this camera. However, I am a bit of a shutterbug, and know already, that I have outgrown the functionality of this camera. I have already pledged to purchase a faster speed and more manual setting camera. I dive nearly year round and will be doing more cold water diving than warm water (crystal clear) diving, so I will need a camera that has custom WB settings along with speed and aperature settings.
Now, regarding your strobe question: Yes, absolutely for this camera. At 30+ feet, I wish I had a strobe to help bring out the colors and depth of the objectives I was trying to photograph.
I hope this helps. For the price - I give this camera 5 stars. If you are only diving a few times and not an Ansel Adams wannabe, get an affordable and reliable strobe, a battery charger and a 2 8 packs of batteries and enjoy yourself.