I've used the Pentax Optio WP for a couple of years and have been extremely pleased with the results. I was initially reluctant to "move into" it as I had a Sony Cybershot U which was familiar and very much a known quantity, but it died one day in the Maldives and I had no choice but to start using the Pentax in anger. All I can say is that I wish the Sony had died sooner - I'd have better photographs from the first few days of that holiday if it had.
The camera has a large number of modes including an underwater profile that colour balances underwater photos really well - the water colour is true to life and any reds or yellows are also as you see them. I'm a bit of a luddite when it comes to pre-defined settings, but given the results I've achieved using the underwater mode, I also checked out some of the other modes. I'd really advise you to read the manual (!) and also take the time to try out the various options as there are some subtle differences between a couple of the settings. The low light setting produces good results and the ISO option also produces nice results in low light situations - sometimes the grainy results give a much better impression of the original scene with warmer colours than you'd get if using a fill in flash.
I'm a bit of a saddo that like to take close up pictures of flowers, plants, insects, lizards, corals and fish when they stay still long enough and the macro focus setting gets a lot of use. The auto focus works well and some of the macro photos I've taken are rather good - best results in good light, but some reasonable results with flash as well.
The water and dust resistance of this camera are good - spending four or five hours in the sea two or three times a year is a good test and as long as you wash off the salt water after each foray and you keep the seals clean you won't have any problems. The access flap for the battery and memory card has a secondary lock which is reassuring and stops you from accidentally opening the camera at the wrong time. My version of this camera is rated to 1.5m (the later model is now good for 3.0m), but I like to free dive and it's survived brief exposures to more than 4.0m without any problems.
This camera has now been given permanent space in my not-very-big handbag as it's proven to be an excellent all-rounder. My one big gripe is that although it flies really well, it's not good at landing - bouncing down a short flight of ceramic tiled steps has taken it out, but I'm not too concerned as I wanted to get the more recent version and now I don't have to concoct some exotic excuse.
Buy one you won't regret it - include a good size memory card (1.0Mb+) and a case in your budget and you won't be disappointed. Incidentally, camera cases can be expensive, but cases for Gameboy Micro are not and they also fit the Pentax!
I'm now going to buy my replacement.