I've been diving with a Canon S230 in a WPDC600 casing for about a year now. My experience with backscatter is variable - here in the Pacific Northwest, where there are a lot of particles in the water, I can get severe backscatter with the internal flash on any shot longer than 3 feet, and sometimes less. On the other hand, on my dive trips to Hawaii, I've found that backscatter isn't really a problem.
However, the internal flash is very weak, and you'll probably find it provides no real illumination at all past 6 feet or so. You'll likely want an external strobe; I've never heard of Canon selling their own underwater strobe, though. Additionally, underwater strobes are not cheap, particularly since you need one that can interoperate with the preflash Canon uses in the Powershot series to predetermine exposure before taking the real shot.
Options:
1) Get a strobe capable of ignoring the preflash and only firing on the real shot, like a Sea&Sea YS-90DX or an Ikelite DS-125 (I'm sure there are others). Though I'm a little suspicious of this, since it seems like it would confuse the camera's exposure, lots of people have great shots with this setup. You'll probably spend $800 or more on this setup (strobe, manual controller (for Ikelite, at least), and strobe arm); you'll get a great strobe if you upgrade your camera later.
2) Get an Inon D-180s. As far as I know, it's the only underwater strobe that actually duplicates the preflash and lets the camera determine exposure the way it wants to - and claims to give longer camera battery life as well, because the camera doesn't have to fire its own flash at full power all the time. This will likely cost you $600-700, though it doesn't (as far as I know) support TTL auto-exposure, so if you upgrade your camera to a digital SLR later this won't be a good strobe for you.
3) Do what I did initially, and get a cheap SeaLife external flash for $200. Unfortunately, this strobe does not recognize the preflash and ignore it OR recycle quickly enough to fire twice, so unless you jump through hoops like I do to lock the flash exposure, your pictures all come out radically underexposed. I DO NOT RECOMMEND THIS OPTION AT ALL. (To take a picture, I have to frame the image once, push the shutter half-way and press the flash exposure lock button on the back of the camera, which fires both strobes and locks the exposure; wait for both strobes to recharge; frame the shot again and take the picture. Oh, and if you touch any other controls on the camera, even half-press the shutter button and release without taking a shot, it releases the flash exposure lock, so you have to start over. Needless to say, I don't get many shots of skittish fish. 
I'm planning on upgrading to a digital SLR very soon, so I'm just living with it for the moment.