My top choice is leather but I understand that Kydex has it's place.
It also depends upon the knife. For example, a Bradford Guardian 3-leather, always. My Benchmade 162- Kydex or leather depending upon what I am doing. Snow camping, Kydex. A family get together, leather.
Here is my basic rule of thumb, if I'm out in public or hunting, leather wins out. It looks good and it's quiet. If I am not worried about weather, noise or looks, Kydex is the winner. Long term storage, Kydex wins again.
Some knives just don't work with Kydex though. My father's old hunting knife, for one.
The one thing that I don't care for, ever, are those hard plastic scabbards that make tons of noise and don't really fit the knife well. You guys know what I am talking about.