...better with a case? IMO, I think my iPhone looks better with a case on it than without one. Not only does it look better with the case, I also think it is easier to handle with one because it seems like the phone is almost too thin. Lol. The bare plastic back also doesn't look particularly good to me for some reason.
My 1G never had a case. Was mint when I got my 2G and gave it to my nephew. He destroyed it so my 2G, mint when I gave it to him, has a case. He would not even use it until he got a case. My 3GS, now five months old, does not have a case or a ding. (I admit that it does have 2 sq. ins. of Velcro on the back. This resists dings and drops.)
The design of the iPhone is too elegant to be hidden by, much less improved by, any case that I have seen. If I were to ding it, I would simply get another; perhaps in June 2010. In any case, it is a consumable.