I use BodyGuardz. I have it on my 3G and 3GS. It's a pain in the rear to put on but it is definitely worth the investment.
Also on top of that also user Marware's Sports Grip for a case. These two things have kept my I phone looking brand spanking new. If I had to sell my 3G it would look like day one especially because of the BodyGuardz. Nice and clean no scratches.
One other negative aspect of probably any clear body cover is if you have a Mophie Juice Pack. It makes taking the iPhone out of the Juice Pack a little stiffer.
If you want to protect the screen and the body I highly recommend some type of covering. By the way it does not affect the functionality of the touch screen.
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