I have the prior one (the EHS-500X and VPC-C5 camera)
My quick take
Pros: The system is TINY, the camera easily fits in my pocket, when adding the housing it's slightly larger, but still very small and compact, easily fits in my Reg Bag for taking on planes etc. System takes okay photos and video. Epoque housing seems to be very good, while it's got a fairly large opening, it seems very secure, I gently clean the O-Ring every time I use it and in over 20 dives have yet to have any issues at all. Video file size is good so a 2GB card will hold well over an hour of video.
Cons: Battery life is shoddy (about 45 minutes max life when constantly on) video quality is definitely not as good as my old DV camera, although it doesn't have some of the issues tapes do have (never have to clean the camera heads etc). Both photo and video quality is... okay, so while you can use it for both it doesn't do either particularly well. Performance in low-light is not so great (for the VPC-C5, I gather it's better for the VPC-C6, not sure about the HD1 or 1A).
Overall I really like my camera/housing combo, for the CASUAL video/photography that I do I find it works really well and is a pleasure to use, I don't have to lug tons of equipment around and I still get some reasonable quality videos/photos.
If you want really good quality video then don't get this, it will not work. Currently I'm hoping to end up with a Canon one day, but currently the video files they store are so huge that you need an enormous card to store it, the SD800 is what I would like, but I'd also want a 16GB memory card to store a good hour or two of video on.
edit: Video sample from Metridium fields in Monterey CA
http://video.google.com/videoplay?docid=2389501519270896745