Being on the same axis is not by itself a problem. Many studio setups use strobes on the camera axis. There are even shoot through lights likes ring lights or a moon unit.
Size can be a real issue but if all you want to add is a gentle flick of light on a subjects face just to help reduce the shadows a bit it can work just fine right on the hot shoe. There are lots of ways to increase the size too.
A great inexpensive camera for this is a Nikon N90s, up from that an F100 or F5.
A great strobe for these cameras is an SB90dx has the tilt and swivel head too. That's not the only good choice though.
F/2.8 or faster lens will also help, gives you more choices.
I'm more into the small compact rangefinders
Or small compact zone focused camera's.