I have the 1030SW, which is the previous version. The main difference is that mine doesn't have image stabilization.
On image quality:
The important thing to understand is that you buy one of these cameras for their durability, not for image quality (IQ).
No digicam has IQ that matches DSLRs. If there was one, there wouldn't be nearly so many DSLRs sold. The subcompacts with their necessarily tiny sensors are particularly challenged.
Furthermore, Olympus has not been a leader in digicam IQ for some years now. Then there's the folded-optics lens that these particular models use.
So here's the deal. You'll get good 4x6s, even 5x7s. But if you pixel-peep, you'll probably be disgusted at the noise and softness in the image, particularly at ISO 400 and above.
You can actually get good 8x10s out of this camera if you shoot at low ISO. The problem is that the camera's auto-ISO system almost always wants to shoot at a minimum of ISO 400 or 800. The only way to avoid auto-ISO is to shoot in Programmed Exposure mode (camera icon on the dial, "P" symbol on the display). If you use any of the other modes, including the scene modes, you'll get auto-ISO.
Most people don't know that. As a result, these cameras get a worse rap for bad IQ than they deserve. The IQ isn't the best, but it doesn't need to be as bad as most users are getting.
(By the way, I fibbed just a bit for simplicity's sake. There are three "underwater wide" and "underwater macro" scene modes that default to auto-ISO but can be overridden.)
Bottom line: I use my camera intelligently, and I get nice prints at normal sizes.
A personal preference: I leave my camera at the 5 megapixel setting, which gives me 5x7s at over 300 dpi and (if desired) 8x10s at about 240 dpi. The 5 megapixel setting reduces the appearance of noise and softness except when using the "fine zoom" crop-only digital zoom feature to get an extra 2x zoom range. And of course it makes for smaller file size which translates into more pictures per card and faster operation.
By the way, a couple of the low-light scene modes force 3 megapixels maximum, as does the "fast" continuous-fire feature and the "shoot and select 1" scene mode that depends on fast continuous-fire.
Exterior skin:
The innards may be hard to destroy, but the exteriors on these cameras are surprisingly easy to scratch. If you don't care what your camera looks like as long as it works, great. Otherwise, you might want to look into one of the soft plastic (silicone, etc.) skins like
this one.
Waterproofing:
Some people are taken aback to learn that the waterproof seals are only guaranteed for one year. If you're planning on taking the camera underwater, you're supposed to send it back to Olympus every year for seal replacement. I don't know of anyone who has done that. You can buy a real "underwater housing" for about what that service probably costs.
More important, I think, is just to visually check the seals to be sure that there are no hairs, dust, etc. on them before taking the camera underwater.
Usage:
Just about any subcompact digicam can be interesting to learn to hold. On these models, the position of the lens is right where your left index finger will be if you just pick the camera up. Guess what you'll get a picture of…
There are explicit drawings in the manual showing how to hold the camera so that you aren't simultaneously blocking the lens, flash, and viewscreen. Do pay attention.
As with most digicams, the LCD viewscreen is frustratingly dim in bright daylight.
Olympus's menu system is famous for being, ah, different. It does take some time to figure out what's where.
Memory cards:
Olympus has apparently decided not to push their xD memory card technology beyond 2GB. So these days they provide an adapter that lets you use microSD and microSDHC cards in the cameras too.
On my camera, I can't shoot max-resolution video (640x480 at 30fps) on microSD for more than 10 seconds. I need to have an M+ type xD card to get around that limitation. I believe that the Tough 8000 no longer has that restriction and will shoot extended max-resolution video clips on microSDHC cards if the cards are fast enough.
Olympus still insists on locking out the camera's panorama modes unless you're using an Olympus-branded xD card. This is strictly a marketing feature. There is no technical reason for it. The in-camera panorama modes do a nice job of stitching the photos together, but the resulting panorama is limited to 3 megapixels!
MicroSD/SDHC cards often come with an SD/SDHC adapter so that you can plug them into card readers and various other equipment (my Wii, my TV, and my home theater system all have SD/SDHC slots). Good luck doing that with xD cards.
So in the end, microSD/microSDHC cards will probably do just about everything you want (class 6 recommended for speed, especially with video). An Olympus brand xD card will let you do panoramas, but only the "combine in PC" mode is likely to be of much use.