A flat lens will make a huge improvement in that video...I think that is not bad for the first time using the GP camera. When I use the head mount, it is very tough to get smooth shots that extend for more than a few seconds. You have to remember that you have the camera on and move like a zombie the whole time.
Also, the camera needs to be tilted down more than you would think... whatever the heck that means...LOL...We don't realize it too much when diving, but we are almost always looking down rather than ahead, so in order to film more of what you are looking at, you have to angle the camera down. If you want to film something in your hands or 2-3 feet away, it helps to adjust the camera down even furter, but then you have to remember to toggle it back up a little when you are done with the close up.
I've been using the new MAKO lens with the GoPro Hero2 and have been happy with 1080 in the medium width setting.
With a flat lens and a little more practice, your videos will change dramatically.
One last thing, hand holding the camera is MUCH easier to get better, more stable, more controlled video.