I just bought an Otterbox for the iPhone 4 and I LOVE it so far. Shortly after the first purchase, I went out and bought another one for someone else I know with the same phone. Of course it makes the phone bigger, but it's SO much easier to hold onto now and take pictures/video in landscape mode. Tapping the screen in landscape mode without a case on, was like a time bomb to me, especially when asking someone else to take the photo. I would wince a little inside each time worrying that they, or I, might drop it. Not so much anymore
As for scratching, I have not noticed any issues at all with the screen. In fact, I really like the fact that the screen protector is a part of the case, built right in and ready to use. There's no adhesive, or chance of a misplaced installation as with so many other screen protectors.
If you're considering the Defender case, go for it. If you don't like a little extra bulk, that's understandable. It's not for everyone, but for someone who's always out and about, and moving around beyond a desk, it's brilliant!