Yes, u need the dive housing for good video which is 50 bucks
I am not sure why you need to buy a separate dive housing when every edition of the HD Hero 2 provide a 60m (200 ft) waterproof housing
and one of them comes w a headstrap not the surf one though otherwise that is 10 bucks.
and the outdoor edition provides all kind of straps (including head and helmet straps)
Also key for good red color at depths is a red oculus filter which is like 40 buckd on ebay.
I found a red filter for $15 on
Amazon. Not sure what it is worth though.
This is a great vidcamera but not the best for still shots.
I found the still shots to be actually not good at all (in the outdoor at least, they are too much convex). But for HD videos in extreme places and weather they are the best.