May 30, 2010.
This thread started 5 years ago but I'll try to add some current info about P&S cameras that are being sold today and a few that have been made in the last 4 or 5 years.
The best digital cameras for UW allow manual control of exposure so you can set shutter speed to sync with the flash and set aperture for distance. Without manual settings most cameras shoot in auto mode. The typica; P&S camera sets ISO, SS and f-stop for the available light. Because there's often enough available light for a simple P&S pocket camera to take a picture without flash the camera won't fire it's flash much. In Auto mode with any camera you get slow shutter speeds with blurred fish because you need a faster SS to stop action. You also get a bluish tint to everything because the primary light source is available light, which is mostly blue below about 10 feet.
With only about 2 or 3 exceptions (Olympus EPL-1, Canon G-11 and Nikon P9000), the best P&S digicams for UW photography aren't being made anymore. Whatever you get make sure it has manual controls so you can control the on-board flash, not just auto exposure, aperture priority or shutter priority. With that control you'll be able to get color back into the UW scene, within the distance limit of the built-in flash or a slave strobe for more powwer. With that kind of control you can add a slave strobe later when you're ready to add more light and more range to the camera.
People buying the current (2010) P&S UW cameras try to add a decent slave strobe to them for more true colors and enough flash to stop fish action. But no matter what they do they can't get enough light into their UW photos because the auto mode adjusts exposure for the available light and shuts the flash down early.
Here's an example. A good friend of mine took one of these typical inexpensive P&S in a plastic housing on a dive club trip to Curacao recently. Those of us with exposure control got good results. His photos, with his bargain P&S in Auto mode and a $1000 Inon slave strobe, weren't nearly as good as a what people got who had the same strobe because his camera doesn't allow manual control of exposure and flash. Another buddy has a better camera, the Olympus C-5060. That's a 5 year old P&S camera that still outperforms everything on the market today (except the EPL-1). But for a long time his photos were mostly blurred fish shots and filled with blue light (no red, yellow or orange). Once he understood UW flash he got great results by taking the camera out of Auto mode. He set ISO to the minimum, stopped down the aperture to f/5.6 and set the shutter speed at 1/125th second. That forced the camera and slave strobe to provide more flash and fill the frame with light.
With few exceptions, most of what's being offered today by Canon, Olympus, Nikon or Panasonic are simple P&S with no manual exposure or flash control. The best off-the-shelf UW camera and housing sold today may be the new Olympus Pen EPL-1 micro 4/3 camera in a new Olympus UW housing. The Canon G-11 in a Canon housing, or much better, the same G-11 in the Ikelite UW housing is one of the few P&S cameras that will allow you to get decent photos using an UW strobe. And there's also the Nikon P9000 that offers manual control of flash. Even if you're not buying a fancy UW strobe now, you want to be able to control the built-in flash and have the option to advance to a more powerful UW strobe in the future.
I have what is probably the best UW P&S camera ever made for UW, the Olympus C-8080 P&S bridge camera in an Ikelite housing. The lens is super bright and sharp, the sensor is a decent 2/3" CCD, the camera will record images in RAW and it offers complete creative control of exposure and flash. Cameras in a rugged Ikelite housing allow using Ikelite strobes in direct connection to the hot shoe and TTL camera control of the strobe for correct UW exposure.
Another UW P&S option with manual control that is still available used is an Olympus C-5060 or the C-7070 in an Olympus housing. Or the slightly older Olympus C-50 and the Olympus C-5000 in Olympus UW housings. The Canon A610 or 620 in a Canon housing offers manual exposure control too. Of all of the great Olympus Camedia C-series cameras, the C-8080 is the best P&S camera Olympus made. At least until they released the new Olympus Micro 4/3, EP-1, EP-2 and EPL-1. The Olympus C-8080 compares well to the Nikon Coolpix 8800 and the Canon PowerShot Pro1. A good friend has the C-7070 in an Ikelite UW housing and that's probably as close as it gets in image quality to the C-8080 in an Ikelite housing. The Ikelite housing is still better than all of the UW housings offered by any of the camera makers because it's rugged, some of the models offer a dome port for wide angle, Ikelite offers great service for all of their housings and if the camera has a hot shoe you can add Ikelite strobes to them with direct, TTL control of the strobe. If the camera has manual controls but no hot shoe you can still use slave strobes from Ikelite, Sea and Sea or Inon.
The C-8080 has worked so well for me that I have a hard time letting go of it, but I've recently upgrade to an Olympus E-330 DSLR with real-time Live View in an Ikelite housing. So I'm selling the C-8080 (June, 2010).