Neither! Leather is too soft and Kydex too hard. The perfect balance is horsehide. A Kramer OWB Scabbard in horsehide is as stiff as Kydex, yet as soft inside as leather. It does not soften when soaked in water and has excellent retention. They can be spendy, but not terribly so at $126. They also take about 6 weeks for delivery, but it's worth the wait.
+1, Kramer holsters are excellent, they were what I stocked at the shop I worked at. The horsehide is tough and thin and keeps it's shape well. With leather (and most things in life) you have to buy quality like Kramer, Sparks, Alessi, Rosen etc, their holsters keep their shape and have excellent molding. The mass produced holsters from companies like Galco and DeSantis etc, look good and come in attractive packaging with a lot of marketing dollars behind them but they don't hold up as well. I saw a lot of Galco holsters that weren't reinforced at the mouth start to curl inward or just get soft overall, they don't have the rigidity of the higher quality brands which can be a safety issue.