When Brian up there made me a knife, he included a kydex sheath. The carry options are really nice to have, but I find that kydex is brittle and tends to crack, it's ugly, and it stands out when you're carrying it (I think some matte finish tape of some kind would solve that, though).
I had no real problem with the kydex though until it started taking noticeable chew marks out of the knife scales. It really sucked to sheath/unsheath the knife knowing that each time the micarta was getting all those scratches in it, and not even from use or abuse! Luckily my girlfriend took note of my complaint and ordered a nice leather sheath from Brian. It rides low, the blade doesn't catch on the sides of it, it's more flexible, it looks better, has a better purchase on the knife, and doesn't scratch! It blends in better with my omnipresent brown leather jacket and earth tone clothing.
I still use the kydex sheath if I'm going to be out in the rain or I think the leather one might get damaged. I just put a few strips of masking tape right at the opening of the sheath and it doesn't scratch anymore. Your best bet is to clean the sheath with water and make sure to get any grit out. Never use sandpaper or other abrasives on the inside of kydex.
