1) It is very handy for taking quick, easy video. Storage on SD card is very convenient.
2) The picture quality is definitely second-rate. I would rank it alongside current generation phone cameras. It will do in a pinch, but that's about it.
3) Principal problem is poor quality in low-light conditions.
4) The form factor seems kind of snazzy, like it will feel neat in your hand when using. Actually, however, it gets old fast. It's an uncomfortable position to hold your hand in. And taking pictures is actually pretty difficult. If you've used a camera, you're used to holding a camera steady with one hand while you press a button with the other. With this, you're doing both while holding the device pistol-style, which results in movement you'd prefer to avoid when framing your shot.
5) As to underwater use: mine's not had problems yet, but I've got to say, looking at the manufacture, it doesn't inspire confidence.Get more detail about Sanyo Xacti VPC-E2 Digital Camcorder and 8 MP Digital Camera (Blue).
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