I have used one time use cameras on vacation all of the time. I like the underwater ones, as I don't have a real underwatrer camera to goof around with. The photos are usually OK, and they are just the kids and I goofing off at the beach or pool. I like the fact that I can record a quick snapshot, and not worry about anyone dropping the camera in the ocean or pool.
To take this a step further, I bought a Nikon N-70 camera for $17.00. I was given a 70-300 lens from a friend, and I added a 28-105 zoom. I don't have a lot of money invested in this kit, yet it can produce wonderful images. Last summer my 5 year old daughter wanted to take a few photos while we were at the beach. I handed her the camera told her to stay out of the water, and have fun. She took about 10 photos before she dropped the camera in the sand, and came running back. But, since this is my vacation camera, I wasn't worried. I just brushed off the heavy sand, and told her to go play. I later cleaned up the camera properly, and the trip to the beach and sand has had no ill effects.
With 35mm film gear sooooooo cheap, why mess around with a one time use camera. You can buy a real camera with a zoom for next to nothing, and have a ton of fun, and produce better results.