The olympus is pretty rugged. I've taken a friend's diving a few times, and it had a decent picture underwater all things considered. Also drop proof as my buddy demonstrated. I wasn't too stoked on the images in general though. Colors weren't true, and exposure was always a little off. Bear in mind this was an older model, so updates have hopefully been made to the image quality.
If you want a point and shoot that produces excellent images, I recommend the Canon PowerShot S90. I have the S90 as a p&s alternate to my 7D, and the pictures it is capable of producing are pro-quality. The f2.0 lens is fast, although the shutter action is obviously not up to par with an SLR. This is NOT water proof, but it is a solid built, all metal camera. If you get a rigid case, this could be your bet, unless you're planning on serious rain exposure.
Good luck.
