I was actually weighing the choice of waterproof camera vs. waterproof housing vs. waterproof iPhone case, too. I ended up going with the Canon Powershot D20 waterproof camera (~$290). I was nervous about some of the leaks/failures I saw reported in some of the sub-$180 cameras on their first or second use. I also wasn't comfortable with putting my iPhone at risk three days into a 14-day vacation, and the waterproof housing for my camera is $200. So, I bit the bullet and got the Canon.
I tested it shortly after it arrived, using it while we cleaned out the pool before the weather got too cool (and playing a little joke on DS7). The video and still image quality are great, and the audio was very good. It even has a 5X zoom, and is easy enough to operate and ruggedized enough that DS can use it.
Here's the video of my test (the audio drops out when the camera drops in, but only because we were above the water and it was 4 feet down...):
https://www.facebook.com/photo.php?v=4623871925968 (you may need to be on Facebook to see it...)
°o° Lace Planning our second WDW adventure, 11/1-12 AoA-LM (Sent from my iPad using DISBoards)