IMO, I think it all depends on how you use your iPad and how cases/accessories compliment that. It took me awhile during the first iPad to discover that I really don't have a use for folio style cases. I think some of them are rather nice, but for how I use my iPad day-to-day, they didn't work for me. I ended up using the Belkin Grip Vue for protection and added grip and it felt right to me.
The smart cover can be a nice complementary accessory to anyone that likes to use their iPad nekkid, with a skin, or shell. For someone like me that likes to use a shell or TPU skin, the smart cover gives me the added functionality (screen cover, typing and viewing stand) that I did not have before, that I was missing with the folio, but without the permanency of a folio. When I don't need any of those features, I can simply remove it.
I think the part a lot of people get hung up on is the price. For what it is and what it is made of, the smart cover is over priced. We can probably say that about a lot iPad accessories, but IMO definitely with the smart cover. I was aware of that, but bought one anyways. I like it, and think it complements how I use my iPad well, and I am aware of the premium I paid (still manage to get a "deal", $58.xx for Leather Navy at AAFES.com and no tax). When it comes to iPad cases, "different strokes, for different folks", and the smart cover is no exception.
Now I just have to find "MY" smart cover compatible skin/shell. 😀