Generally speaking, stills from video are a lower resolution. If a video camera is shooting true HD at 1920x1080, that's much less resolution than straight up digital cameras. My Canon point and shoot creates 3264x2448 images and my Canon dSLR 4752x3168.
If shooting videos is your thing, get the camcorder. If quality still images are what you're after, go with the camera.
The blue pics are a result of shooting under high color temperature lighting. The various exposure presets (action / landscape / indoors / etc) don't deal with that. Even if a camera has white balance presets they rarely go above 10,000K while reef lighting can be as high as 20,000K. The ideal solution is to shoot in RAW mode and set the color temperature in post processing software. Not all cameras can shoot in RAW mode, so that's something to investigate while comparing features.