I'm pretty new to UW photography myself, but I've been using the Canon SD 800 IS which I assume is the recent predecessor of the 850. It's really kinda apples and oranges in one sense. The SD 850 is a true compact point and shoot without alot of options whereas the G7 has full manual controls which is what you want if you're interested in maybe progressing further with your photography. With that said, you can take some great shots with the compact once you get to know how it thinks. I took these with the SD 800, an Inon external strobe and (sometimes) a Inon wide angle wet mount lens using the pre-set "underwater" mode:
http://gallery.mac.com/philsokol#100023
(most of these have been cropped and had some post-processing, at least what iphoto will let you do)
The other advantage to the SD is it fits easily in a pocket for topside use. Underwater, the shutter delay can be maddening. The G7's been supplanted by the G9, so it's last year's technology, but from my readings, that camera has a loyal and devoted following. I've never used it, but that series is the top of the line for the Canon point and shoots. More controls, more variables - if you're willing to deal with that and learn, probably a better choice in the long run.
