Since you're using the internal strobe, I don't know if the M mode makes much of a difference. You need to get close to your subjects, or you'll get a lot of backscatter. I haven't used an internal strobe since my S-50 flooded on me in Palau. I have used M mode with my external strobe - basically because the rig I've got requires that I use M mode in order to fire the strobe. Its also solid metal, the internal strobe doesn't illuminate anythign even if I wanted it to. I've used P-mode on a dive, because I was a knucklehead and didn't get my strobe cable attached correctly - this reminds me that you should always test fire on the surface to make sure everythings working before you go down.
Before I flooed my S-50, I found that it worked best to set the shutter to 1/60 (which is what the auto would usually set it to), and then use an external light or no strobe at all. I suppressed the internal strobe to avoid the backscatter, but in Roatan, Truk, and Palau I would admit that I was not shooting macro shots. If you're shooting macro, I admit I don't know what settings will work best with the internal strobe. With a Nikonos 105, I typically have manual mode set to 1/400 to 1/1000 for the shutter speed, and an aperture of 5.4. And I typically have to change the stobe to 1/4 or 1/16.
One thing you didn't specify is your experience level, and your profile doesn't mention it. If you don't think you're really good at buoyancy control, go with P mode, and make sure you work on staying in control while you take your pictures. Your picture quality might suffer compared to manual mode, but you'll have a few less things to think about and you'll get better at a critical element to picture taking, buoyancy control. If you are an experienced diver, just use M mode and take a bunch of pictures so you can get a feel for the settings; you'll get some screwed up pictures, but it will pay off in the long run, and there's no doubt you'll be doing a lot of picture taking. Face it - you're not going to go throw your camera in the trash after one dive (I'm going to assume you won't flood it). Once you've got the 5050 you are *hooked*, and will eventually turn into a photography freak. If my 5050 floods, I'll get a DSLR for my next camera - I am an underwater photography addict at this point.