I have the Sony Digital8/HI8 DCR-TRV350 with an Ikelite housing.. I have used it on 4 trips.. I have been happy with the quality of the videom for the most part.. the pixals are about 260,000, It also has a memory stick for stills with 160,000 pixals.. I had the camera first so I bought a housing for it..
If I was starting again I would invest in the Mini dvd's, since you are going to have to buy the housing anyway, the pixals are about 2M and you can create stills(2m) from the video...
I have been using Pinnacle Studio 9SE for the editing.. Simple to use, however if your PC is not fast enough(RAM) and/or you
do not have enough space on your hard drive the videos studder unless you upgrade your PC.
Good LucK...