Several thoughts regarding your question:
1. The Sony TRV950 is a GREAT camera (on both land and underwater). Many of us, including myself, have used the 950 to great satisfaction. By way of example, I own two of them, along with a L&M Bluefin housing.
2. The 950 is still worth something. Go to ebay and you will see they are on average selling for between $650 and $1,000, depending on condition and accessories. That's says a lot about the quality of a roughly 7 year old camera, that sold for roughly $1,200 new.
3. $650 is a modest investment for dipping your toes into underwater video. That said, see if you can negotiate the price down to around $500. It's worth a try and will make you feel better about the purchase should you prove to be a good negotiator. I would.
4. New Technology/HD: Despite all the great things about the 950, you can't beat the quality of HD. But keep in mind there are significant performance differences between the many cameras you can choose from, and the 950 shoots great video. Moreover the cost of entry into HD isn't insignificant. I finally made the leap last month, and in the process spent $20K. In addition to a new camera, housing, etc., you may need other hardware such as a new computer or a more robust editing system to accommodate HD video, just to name a few things you may not have considered. For me the key question is how often you intend to dive/film and if you are committed to the hobby. If you intend to travel more than once or twice a year on a dive vacation and you've filmed underwater and understand it's various nuances, then I'd say sell the 950 and invest wisely. Otherwise, spend $500+ bucks, gain some experience, learn the ins-an-outs of underwater video, and make the move to HD in a year or two. Remember, it's more important to get wet, and have fun vs having the latest and greatest technology. Good underwater cinematography is more about the artistry than the technology; although at times technology can help.
Bottom line, keep the 950, buy the used housing and go have some fun!