Something that I've not seen mentioned on this thread, that I think is very important.....pay special attention to the tanning process used on the leather you purchase, especially the imported leather. I used to purchase leather from Tandy/Leather Factory, for the same reason(s) that others have mentioned...I could buy it locally and see it before I purchased. The problem is, even though the leather is offered as "Vegetable tanned" or "Oak Tanned", I found that the import stuff is actually chrome tanned initially, then run through a Vegetable tan process. It's a cheaper process, and they can still apply the "Vegetable Tanned" label to it, however, This has the undesirable characteristic of the leather still having chromatic acids present in it. That might not be a big deal to some, but I have found that over time knife hardware will corrode with these leathers, just as if the sheath were made of Chrome tanned leathers.
I've used a number of the leather sources mentioned, and although I have returned some sides because of brands, scars, or cuts, I still believe that the best leather comes from the "Mom-n-Pop" tanneries. One of the mistakes that I think knife makers commonly make is using too light of a leather weight for their sheaths. All too often I see a very nice custom knife, with a sheath that looks "cheesy" because the individual used 5-6oz leather. When I ask about this, the answer is usually "It's easier to work with." I just have to shake my head.....as knifemakers, we put a lot of time and effort into the knife....why would we not take that same effort, care, and thought into making a proper sheath in order to present the customer with the best "Overall Package" we can offer? I personally never go lighter than 8-9oz, and most often use 9-10oz.