The leather on my two sheaths are really good. I have an H1, and a WM1. Both sheaths are made with leather almost 1/8 of an inch thick. My take is what you want from it. If you want a sheath that doesn't gunk up much, or is easy to clean. Take the zytel. If you want a more traditional-looking, and as such, sheeple friendly, take the leather.
I have one of their zytel sheaths for a WM1 aswell, and from what i can gather, it's pretty good too.
I'm guessing it's more up to taste, than anything else.