I just got this camera and am putting it through tests before committing to keep it (during the return window), to see if it performs well enough to replace my canon PowerShot and flip as an all-in-one.
If you read the manual, it spends two pages with warnings and instructions for underwater use. Besides the obvious specs (10 feet and 1 hour per session), there are a lot of other caveats. For example, even though it is "shock proof" if you do ever drop it they no longer will endorse that it is waterproof unless you have the service center replace the seal. So, put another way, if you use it within spec but it leaks, they will look for any evidence of a drop, no matter how minor, and use that as an excuse to void the warranty on the repair.
Then lets say you get through the first year when the Panasonic warranty ends. Panasonic also says you need to have the service center replace the seal as a routine precaution, even if you have never dropped it or used it underwater. So if you get an extended warranty, with them or any other company, and you don't replace the seal and it later has water damage - even from splashing and not a full submersion - again, that's an excuse not to honor the extended warranty because by not replacing the seal you are not operating within the specifications set by Panasonic within the manual.
So you would think if they designed the camera to specifically require an annual seal replacement they would be setup for that to be a reasonably routine procedure? Think again. I called Panasonic directly about this. They have only ONE service center in the entire U.S.A. in Illinois. So you have to ship it to them, at your expense, and wait typically 14-17 business days (their estimate). And here's the kicker. They treat the "routine" seal maintenance, required by their own operating specifications, as an out-of-warranty repair" and subject it to the standard flat repair rate of $140 + parts. So even though you are doing exactly what they designed the camera to do, they want to charge you almost half the value of the new camera annually to continue to use it as specified.
Bottom line -- if Panasonic really believed in the underwater capacity, they wouldn't require you to spend 50% of the cost to service it as a "repair" every year.
So your choices, as designed and intended by Panasonic, appear to be to either only use it (super carefully) underwater for the first year, then never again, or invest in a 50% of new value (now, assuming it doesn't start discounting in the future, which it of course will) required maintenance annually to keep using it for its intended purpose. Or, three, ignore their suggested seal replacement and know you are SOL if it leaks. And since I have read many horror stories of users with basically all these waterproof models, including Panasonic's camcorder model, leaking even when used correctly, that's a pretty risky bet...
That seems like a scam to me, either way you look at it. Either the underwater feature is really a marketing gimmick that Panasonic doesn't really want to backup or they are counting on most people having not researched the costs of the annual servicing well enough to know that the cost of ownership for this model will be vastly disproportionate to its up-front cost relative to other models.
I am now thinking about returning this on this point alone, but will wait to see the pic and video results. If they are excellent, I guess I may take my chances. Otherwise it seems crazy not to spend the same or less on a model with a bigger sensor or zoom (ZS3) or smaller form factor with a great picture rep (SD960) and smaller price.