This is a tough choice, both hard cases and soft gig bags have their Pros and Cons. Cases can be more expensive but offer superior protection when compared with a bag, although a bag is generally much easier to transport and usually cheaper. One thing we can agree on is that every guitarist should have at least one gig bag or hard case for transporting their instrument.

If you own a guitar you'd be crazy not to spend a bit extra to protect your instrument. A case or bag will protect the guitar from the elements, and prevent scuffs, scratches and breakage if knocked over or bumped in transit. You'll also have the added bonus of storing your spare strings, lead, tuner, capo and sheet music or songbook in the pockets and compartments, so you'll never be caught out at a gig!

Let's take a look at the benefits of each:
 

Hard Case:

  Gives a high level of protection.  A hard outer shell is much more durable than a soft nylon bag, even with padding. Guitars can be knocked over or trampled quite easily, and a guitar in a hard case has a much better chance of survival than a guitar in a bag!

  Better for touring. You can literally toss your axe in the back of the band vehicle and hit the road.

  Airline baggage handlers - do your worst! Most hard cases will stand up to the crankiest of baggage handlers. Drop, chuck and stack away, just don't lose our baby!

  A guitar stored in a case when not in use will retain its tuning better, be less prone to the effects of humidity and temperature, and will gather less dust and general muck. This will make your strings last longer also, and you'll have to clean the guitar less frequently.

  Good for busking. You can store CD's etc in a hard case, and propped open these make great coin-catchers and advertising space.

Soft Case:

  Great portable storage. A soft gig bag is much easier for fitting into a smaller car or carrying with you on public transport. When not in use bags can usually fold or be rolled up for storage. 

  A cheaper option. Bags come in a range of grades and most won't break the bank, they are generally much cheaper than hard cases.

  Not heavy. A sturdy hard case will double the weight of your guitar. If you prefer to walk or catch public transport, slinging a bag over your shoulders makes much more sense than lugging a giant hard case.

 Soft bags are usually more universally fitting, where most hard cases should be moulded to your specific model of guitar, soft gig bags can often fit various types of guitars. This comes in handy if you use different models, but don't want to buy specific bags/cases for each guitar. 

The decision you make will depend on your purpose. Think about what you mostly do with your guitar and base your decision on this. If you walk a lot, you should save your back and buy yourself a Soft Bag with backpack straps. If you travel a lot by air, then you should invest in a solid Hard Case (Note: most airlines now do not permit guitars on as hand luggage, you may get lucky but don't count on it!).

And if you can afford the space, why not get both?