As with most purchase decisions... "it's all about the Benjamins" (i.e. money!). I use an Olympus 4040z with a Light and Motion Tetra aluminum housing and a Sea and Sea strobe, and the setup is fantastic...! Also, the 4040 is a GREAT topside camera with a quick, intuitive interface, as well with a sharp, fast f 1.8 lens (very hard to beat in the world of digital cameras). This camera is terrific for travel, nightime photography, special effects, etc... in fact, I use it more than my Canon EOS 10d digital SLR. The 5050 is probably a lot better, but you can now get the 4040 fairly cheaply. The Tetra housing is a tank, takes a real beating both in terms of impact and pressure, and gives you complete control of all of your camera's buttons.
This setup, however, will cost you almost $2k, so it might not be the best thing to START with. However, I think that using a low end digital camera without an external strobe might be somwhat frustrating, and instead of saving a bunch of money, you might end up not using it that much and wasting the money that you do spend on it..!