In camcorders, $200 - $300 is usually cheap, but $500 is not necessarily cheap, especially if you plan to risk it in a really cheap water housing. $295 is a really cheap water housing, equivalent to the EWA marine closable baggie housing, not really a housing, but like I said, a fancy/expensive baggie. I have a EWA housing for a still camera and it seals at the top with a double bar clamping device. Not the most secure or watertight thing I've ever seen and condensation is a real problem, not to mention that the housing is oversized and it's really hard holding the camera against the glass port. The less you have to think about in the water, the better.
The Ikelite (
http://www.ikelite.com/web_pages/videoone.html) plexi housings are far more secure, and far pricier. I priced one at $600 for a Canon ZR 800 ($300 camcorder) Maybe what I'm saying is better to spend more on a better housing than the other way around. If the housing leaks even a little, there goes a pricey camcorder and the tapes that were in it.
Consider this about a DVD camcorder, in order to get the footage off the DVD, I believe you have to "finish" the DVD in the camcorder, which renders the DVD un-reusable. The cheapest camcorders right now are the miniDV models because they're not the latest model, and the most expensive ones are the flash memory card models.
You pick. Just make sure your housing has a way of holding it VERY steady- not at all easy to do while floating in the water, even on a bodyboard.