howarde:
The S70 is also unlike other S series cameras, with a 28mm equivelant WA lens. (fairly wide angle for a p&s) - the S80 is hardly like the S70 at all, except for shape.
The S80 is actually the same form fact and optics as the S70. It improves on the S70 in that it's faster (shutter, and write speeds) with the DIGI II processor. The S80 would be my camera of choice in a PnS except it lacks RAW, and takes SD cards, and I use CF cards in my DSLR's.
Please ignore my original suggestion, but here are some more just to make things even worst!
The S70 (no longer available new, but you MIGHT be able to find one new if you shop around)
S80 - I believe this camera is also discontinued, but you can definately find it new. Both of these cameras take the same housing, and you can purchase wet lenses from INON.
Both are Highly Recommended by dpreview.
Canon Powershot A710 IS - 7 mpix, has manual modes, IS, and looks like a winner.
Canon Powershot A640/A630 - 10mpix and 8mpix. Both are not as wide as the S70/80 with 35mm at the wide end. These were just announced in Aug, so there are no reviews in dpreview, but the A series Canons are generally very good.
I like and own the S70, and like it for RAW and the wide angle 28mm lens. You will need to confirm UW housings for anything you purchase, and the decision on what to purchase must be yours. You can see results from the S70 in my gallery.
As for size, the Ike housings do have the big arms, but I think you will find that even if Inon's are a lot smaller at the flash head, any good system is going to be somewhat large by the time you add the tray, arms, and what ever you decide you want. You will also discover that Ikelite has one of the least expensive arm systems, and others like UCLS are rather expensive. Basically putting a strobe UW is just plain expensive!
You may take comfort from the fact that putting a DSLR UW is about 5X the cost of putting a PnS UW, and it's a MUCH bigger setup especially if one has two strobes.
I put my Nikon D200 UW, and I can tell you, it is really expensive by the time you get ports and a flash, and the thing is just plain huge. The first time my wife saw the setup she laughed as did my Cousin!