Because my primary (the one I have the most $$ tied up in) activity is Whitewater Kayaking, two of my three cameras are waterproof. I have a Pentax WP that I keep in my PFD pocket or my bike shorts pocket, and also, a Oregon Scientific Waterproof Video Helmet Mounted Cam. My third camera is my favorite. It is a Minolta Dimage Z1 with 10X optical zoom (that is real important outdoors). This camera takes near professional pics and trust me, I am NOT a pro.
As far as a bike camera goes the waterproof cameras would not be a bad idea. It rains out there some times. The biggest problem I have with the waterproof cameras that are on the market now, is that they are devoid an optic view finder and rely soley on the LCD screens and my 49 year old eyes do not do that very well. I notice that many of the cameras are now coming out this way.
The biggest piecs of advice I can give, is look hard at the OPTICAL ZOOM. The bigger the better. Also, an anti-shake feature is good too. The biggest problem with choosing a camera now is that there are so many choices.
Here are some samples of pics and clips taken with my Pentax and OS Helmet Cam.
This clip is with the Pentax:
http://www.youtube.com/watch?v=wruvyE1Bw-U
The stills in this clip are the Pentax and the video is the OS Helmet Cam:
http://www.youtube.com/watch?v=L3HvSdvP23U
Good Luck with your decision.
Jay