This seems like a good cheap camera to let the kids bash around with in the pool: Panasonic Lumix TS20 16.1 MP TOUGH Waterproof Digital Camera with 4x Optical Zoom. Specs are: HD Video, 2.7″ LCD, 16.1 MP Optical Sensor Resolution, 4X Optical zoom.
Its regularly $179, so this is a great price. I have never used it, so I cannot tell you much about this camera specifically. (My past experiences with Panasonic Lumix cameras have been very good).
My waterproof cameras have all been Pentax, and I have my eye on the Pentax Optio WG-2 (below) — but its a more expensive camera at $275. The specs are great, but you pay up for them (Backlit 16 MP CMOS, rechargeable Li-Ion battery D-LI92, 30 frames per second, 3″ LCD, 16 Megapixels, Memory Cards SD, SDXC, SDHC, Video Size: 1920 x 1080, formats: MP4, (audio only) WAV)
If you want a nearly disposable waterproof camera, I’d giver this Lumix a once over.
If money is no object, check out the Pentax