During our first trip to the water park (Holiday World) this year, our waterproof camera became un-waterproof and died a horrible death in the wave pool. It was a Kodak, which has since went bankrupt, and couldn't be replaced. Amazon was cool enough to refund our money despite it being 11 months old since the warranty was no longer good.
After much weeping and gnashing of teeth, I opened up my wallet wide enough to buy an actually good camera. This is the first digital camera I've spent more than $100 on, and its fantastically fantastic. The Olympus TG-3 "tough" camera: http://www.getolympus.com/us/en/tg-3.html
Yes, its the sexy red color. Not only is it waterpoof with a built in GPS, it also has its own wi-fi. With the wi-fi you can import pictures directly to your smartphone and upload them AND you can use your smart phone as a remote control. Your phone will show you what the camera sees (although in a low resolution) and let you take the picture from a button on your phone. It makes being in your own group photos really simple without having to use a timer.
The pictures it takes are very crisp and the auto detect setting knows if its above water or under, how close, the lighting, etc. I've yet to have red eye in a photo, which was a constant issue with the Kodak.
As long as you let it "warm up" for 10-15 seconds before you start taking pictures, it will embed GPS info in it as well, and the included software will show your photos on a world map. It's pretty sweet.