Kobo's official Sleep Cover, while expensive (like 2-3x the price of the off-brands you find on ebay/Amazon), has worked beautifully for my Clara. I previously had a cheap folio case from Amazon, but it started to crack at the corner after only 60 days. To boot, the front cover flap really didn't like bending around completely, so it was always flapping around while I tried to read.
I like the way the Sleep Cover folds around vertically rather than horizontally, and the magnetic latch keeps it in place when folded over. It also helps distinguish my Kobo from my girlfriend's Kindle (with a leather folio case as well) at a glance.
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