The Apple Smart Cover is no doubt overpriced, but the cost of a screen repair is $600 so I'd say it's worth it
Note: depending on how comfortable you are you might be fine with just a glass screen protector + Smart Cover, from what I remember when people were drop testing the iPad 2 and 3 with them they did quite well. I actually dropped my Pro about 4 feet two days after I got it (and the day I learned the repair price) luckily although at that time I had no Smart Cover or carrier the glass screen protector I made sure I had on day one saved my screen.
It all depends on what accessories you get. If you just use the iPad naked, then there are a ton of small sleeves that you can use, and many have shoulder straps and such. However, if you also have a keyboard and pencil, and perhaps stand or other accessories, then you will probably want something that holds everything.
I use in Incase sleeve which works very well for the naked iPad or with a thin back cover. I don't really have a need to carry my ipad somewhere by itself, so if I'm bringing it with me, it means I'm traveling and will have other things with me, so I put the sleeve in a backpack.
I've had the Apple Smart Keyboard, and the Zagg Slim Book. I just tuck it under my arm or carry it in my hand. If it needs to be stowed for a longer period, it goes in my camera backpack with my MacBook.