Hi John, not sure if you're still looking but I had the exact same questions when I was looking. I called
Cameras Underwater and they recommended the Oly 5050.
I think it's a great camera although if you want to us it outside of basic auto mode then get prepared for some serious learning. So, it really is suitable for beginners and more experienced alike.
It can take two types of memory card at the same time (I'm currently using an XD card and Compact flash) so really very versatile. And can take video (at 320x240) for an unlimited time (except for the amount of space on yer memory cards) which you can show directly on a TV.
Loads of options covering exposure, focus settings and also flash (inc rear curtain - which is when the flash fires before the end of the exposure) which means you should be able to get a great range of shots for when you want to be experimental
For the price I think the package is awesome.
Now if somebody could just teach me how to use the bloody thing properly whilst underwater!
If you check out
Digital Diver, a lot of the folks there have the same set-up and you can really see what it's capable of.