I've had an iPad 2 for two weeks now and other than one keynote presentation it has entirely been used by my toddler daughter (age 3).
I've installed a skin to protect against scratches and a screen protector but otherwise I don't feel the need for extra protection since she handles it only on the sofa or when watching a movie in which case it will be stood up on the coffee table using the smartcover. The added bulk, I think, would make it more difficult for her to handle.
I thought that instead of dropping $40 or more on a cover (though essentially I already did much more than that with a skin, a screen protector, and a smart cover) I'm better of with a squaretrade warranty. I would have foregone the screen cover but her fingers like to pick that cute little nose so I'm wiping down the screen all the time -- better to do that to the screen cover than the glass.