Leather sheaths can damage your knives over time, and in extreme conditions. But I have knives that have been in sheath for years without a problem and some that have gone thru extreme conditions without a problem.. Then again, they weren't stored wet or damaged and the extreme uses weren't for long. (But my trailmaster pitted overnight)
But if you can find a super sheath maker who uses space age materials, you can't go wrong. Although he's too modest to say so, Normark is one of the best.