I've been looking for an underwater camera recently as well. I really enjoy photography, but wanted something simple to use underwater since I'm fairly new to scuba and want the ability to just point and shoot (at least for now). I found out from another thread on this forum that there are some amazing deals on eBay for Olympus cameras. For some reason you can get the feature set of $400US -$500US Nikon digital camera for $150US or so for an Olympus. I've owned Olympus in the past and have found their cameras to generally be of good quality.
Olympus also makes their own underwater housings for many of their cameras, and they (Olympus themselves!) sell them on eBay (scuffed/dented boxes, but the camera itself is fine). Or, other sources sell them new, and they are much cheaper than the Ikelite housings sold for other cameras. The housings look well designed, allow access to every button on the camera, and generally get good reviews.
Here's what I just picked up: an Olympus C-5000 for $175 and the Olympus PT-019 housing for $69. Shipping to me (US) was $12 and $15, making the entire purchase about $280. That's amazing for any digital camera setup, but the features you get on this camera are outstanding! 5MP, 3x Optical zoom, and the ability to go from full Auto mode to full manual or Aperature/Shutter speed priorty... It's definitely a camera you can grow into.
You may be able to find something even cheaper if you don't want the manual mode. Also keep in mind that digital cameras with as few as 2 megapixels are fine for people who don't intend to get big prints made to hang on the wall or crop their photos alot before printing.