If there is a specific behavior that is dangerous to others, or the economy or whatever, just punish that behavior.

That would work with normal people. The problem with psychopaths is that they are not afraid and not deterred by the punishment. From wikipedia (emphasis mine):

Psychopathy is a personality disorder that has been variously described as characterized by shallow emotions (in particular reduced fear), stress tolerance, lacking empathy, coldheartedness, egocentricity, superficial charm, manipulativeness, irresponsibility, impulsivity, criminality, antisocial behaviors such as lacking guilt and living a parasitic lifestyle.

• Ventilation - it's hard to keep the components cool in airtight space
• Sound - if microphone and speakers are behind some sort of waterproof stuff then you might sound like you are underwater, even if you aren't
• Maintenance - sealed things are harder to repair

Besides there already are some waterproof and water resistant smartphones, like sony xperia go and panasonic eluga.

1. 1. I enter my login details and click login
2. 2. outlook.com says that my hotmail account was being used by someone else (I'm not surprised - it was a throw-away account) and that I have to change my password. I notice that a randomly generated 32 char password doesn't fit. It turns out they only let you have 16 chars in the password. Cool. I enter my new password and click submit.
3. 3. outlook.com asks me if I have alternative email address or phone number - in case I forget the password. I enter only phone number.
4. 4. outlook.com says that my account has been used by someone else (again) and asks me to enter my phone number (which I already have entered in previous screen) so they could send me a txt message with code. I enter my phone number. The text message arrives with 4 digit number. I enter the number.
5. 5. outlook.com says that we're almost done and asks me to change my password again before starting using the service. It's starting to annoy me so I try to enter the same password as before. They won't let me use it. I try to use randomly generated 32 char password. It fits in the box, but I get error message saying that password can only be up to 16 characters long. I delete half of the password and try again. It says now that the password contains invalid characters (but it doesn't say what characters are invalid or what characters are allowed). I delete some characters from the password (space, apostrophe, etc..) leaving pretty much alphanumeric-only characters. This time it accepts me.
6. 6. outlook.com presents me with big form to create my account, including fields for new password and phone number. None of the fields are pre-populated. I try pressing "Ok", since I thought that I already have an account and entered my new password and phone number enough times. It gives me back the same form with almost every field saying that it's mandatory. There's no link to skip it or otherwise get away from it. I fill in the form (this time the previously set password is accepted) and click ok.
7. 7. next screen says that I'm already logged in with my hotmail account and asks if I want to log-out from it and log-in with outlook.com account. I'm afraid to get more forms to fill in, so I just navigate to outlook.com with a hope that it will work. And it does. It shows my inbox for hotmail.com account.

tl;dr: I wouldn't trust them.