That’s easy—the Yashica T4. Easily the best sub-$500 camera every made. Oh, wait!!! It’s a film camera! No matter. Buy one on eBay (they go for $200 and up). Don’t even thank me. And no, you can’t have mine.
The Stylus Tough 6020Ah, well. I am sure you are not sold on this idea. What you are after is a digital camera, compact, that can go underwater—maybe ten feet down or so. What you probably are after is something like the Stylus Tough 6020 ($300). Really, a pretty remarkable camera, with 14 megapixel resolution, able to withstand a five-foot drop, and waterproof to 16 feet.
For the same price, also look at the D10. Not quite the megapixel level as the Olympus (Canon ranks at 12 megapixel), but that hardly matters. Shockproof from four feet, but waterproof to 33 feet! Pretty good. Plus, I like Canon cameras—they have one of the more intuitive interfaces around.
To go even deeper, try the just-out Reefmaster DC1200. Really, more of a dive camera than multipurpose, but it will do on dry land. You can go down to 200 feet with this thing. And it boasts 12-megapixel resolution. Probably will be around $500 when it comes out in May.
Alas, nothing has a piece of glass that matches the Zeiss 35mm lens of the Yashica. But that’s another story. Happy shooting!