I was lucky enough to get a brand-new Kindle, and of course immediately began the search for a cute, handmade case. First stop: Etsy (no surprise there, since I find all kinds of cute gadget cases and cell covers on the site) where I found these great handmade cases from Hob-Op ($30). The fabric cases come in a variety of colors and designs with a snap closure, and your Kindle is held in place by your choice of elastic corners or velcro.
Plus, if you don't see a fabric design that you like, you can send in your own fabric to have your own custom case made! Now the only tough part is deciding which case to choose.