So what is the real difference between these 3 modes of shooting? There's 2 other that are lower quality modes as well, but I've been doing sample shots with them using the same resolution power and I don't really see any difference between the 3 shooting modes other than with a 256 card i get like 250hq to 125shq to 21tiff images.

I use SHQ. The better the resolution gives you the opportunity to re size and enlarge your photo's. Try taking a pic of the same object, same exposure, distance etc in all formats. Then view a very small area of each in a photo viewer like Photo shop or paint.
Zoom in or re-size the photo and you should notice a big difference between all. You should get a larger capacity ( at least a Gig ) memory card unless you can down load after every few dives. Happy shooting!

The big advantage to shooting in RAW is you have a lot more control of the final processing of the picture. In RAW, the camera just dumps all of the information it has into one file with zero processing. Because of that, you can do a lot more with editing software, Photoshop for example. TIFF,SHQ and all the others the camera does some "best guess" up front processing of the photo and discards a lot of the data that was originally in the photo. Leaving you less information to work with when editing the pictures.
Presently I shoot SHQ in my C5050 but one day I intend to shoot RAW. I am just now getting good enough with the camera and the cost of 1GB card has come down to the point I can shoot RAW. A 1GB card in my camera will hold about 130 pictures in RAW and close to 400 in SHQ. The big down sides to RAW are the huge amounts of memory it requires and RAW files are slow to write.
What you want to do with the pictures also has a big bearing on which setting to use. If you intend to do a lot of editing with editing software, then you really should shoot RAW. On the other hand if all you ever want to do is put then on the web or an occasional 4x6 the lower setting are fine.

Let me throw in a different opinion. I shoot in HQ mode. I have done the experiment of comparing the SHQ and HQ modes and even blowing up the shot I do not see any difference. Now I know this is contrary to popular opinion amoungst serious photographers, but I can not justify the reduction in shoot times and limitations in memory for a very slight difference in quality.

As far as RAW in concerned every one makes a big deal out of it yet I wonder how it would really help most UW pictures. Most UW pictures use the flash and with a flash there would not seem to be much you can do to improve white balance since the flash is the same as sunlight for colors.

I have not done the experiment with my new camera yet.

All this in my opinion and inline with my keep it simple philosophy. YMMV.

Being able to adjust white balance is one of the big benefits to RAW. The camera decides on the correct white balance in auto or what ever you tell it if in you use manual. If you shoot RAW the camera will save the setting and you can change it later. If you shoot in any other mode, the camera assumes the WB was correct, applies it to the shot and discards the information. You are stuck with whatever the camera choose. A lot of people carry white cards to calibrate the WB on their camera while at depth and it changes as depth changes.
As for what resolution is good enough, to some extent I agree with you, I see little difference between HQ and SHQ in 8x10 prints. But on the other hand why not shoot in the higher mode that fits your memory, you just might get that once in a lifetime shot you want blown up. Another reason is for cropping. If you shoot in a low res you have less room to crop before the print starts to get grainy. The cost of large memory has come down so much that I don't see any reason not to shoot in hi res. When I shot film there were films I would not use because they were more grainy than other film of the same ASA.