I went to a Borders that was closing and bought a leather Kobo case for $12. It was meant for Kobo Wifi, unfortunately, so the Touch is too small for it. But it came with a piece of white foamcore board, which I cut so that the Touch fits snugly into it, and painted it black. Unless you're looking closely you can't even tell there's a piece of foamcore in there.
EDIT: Now with pictures.