An unimportant and irrelevant thing is Canon's tendency to make the imaging chips a few millimetre frictions smaller during the last two releases:
10D/300D: 22.7 x 15.1 (crop 1.59)
20D: 22.5 x 15.0 (crop 1.60)
350D: 22.2 x 14.8 (crop 1.62)
More important might be the smaller viewfinder. The viewfinder size data is based on the imaging chip size:
10D/330D: 95% frame coverage, Magnification: 0.88x
Resulting viewfinder image diagonal: 24mm
20D: 95% frame coverage, Magnification: 0.9x
Resulting viewfinder image diagonal: 24.3mm
350D: 95% frame coverage, Magnification: 0.8x
Resulting viewfinder image diagonal: 21.3mm
That means Canon has shrunk the 350D viewfinder to Nikon D70 size (21,2mm) which is noticeable smaller than the 10D/300D.
I use the Sealux GD viewfinder for my 10D. So I don’t know how a cropped viewfinder performs with standard housing optics. But the 350D finder is even smaller.
Battery: I use the more powerful BP-512 (instead BP-511) for underwater and it lasts longer than required. The small battery in the 350D is the same as in my powershot S-60. A DSLR needs less energy than a point and shoot because the display is not used that much. Canon states the new 350D electronics even require less energy. I hope the small battery would last for several dives.
A new housing seems to be required as well. Doesn't look to promising to fit in a 300D housing. Maybe a Pentax *ist housing is recommended
Personally I can not see any housed 300D owner upgrading to a 350D with a new housing. Beside a very few advantages (1.7 Megapixels, a few custom functions) you spent money on drawbacks as well.
from dpreview preview:
Julian