Camera dedicated vs enclosure

I am thinking about getting a new underwater camera. I currently have a
Nikonos IV with strobe and close-up kit, which I bought from a friend
years ago. My wife [my current dive buddy] does not like it because it
is big/cumbersome and I don't like it because I can't see my results
until the film is developed and the costs of development. The quality of
the shots has always been pretty good. I currently have a Kodak
EasyShare Z740 digital camera and I can't find an enclosure for it.

My assumption is that going with something like the SeaLife Reefmaster
DC500 would be better than getting another digital camera and an
enclosure? I assume that a dedicated uw camera is better than a
camera/enclosure? I want to keep my budget to around $500 but can
stretch that some if need be.

I also assume that getting the external flash would be a good idea if I
want to shoot close up shots. Otherwise it is not necessary?

This is in preparation for a run to Hawaii this summer.

David