Yes, the glass is Gorilla Glass, manufactured by Corning. It's very scratch resistant, but can be brittle and will shatter when dropped (I've dropped mine half a dozen times with no problems, tho. I do have a Seidio case on it, but others with cases have had their screen shatter, so it's more of how it hits than anything.). There are videos on YouTube of people thoroughly abusing the screens with car keys and the like, to no avail.
Early smartphones, especially going back to the early Palm Pilot days, they have relatively delicate screens made of plastic, plexiglass, or a soft-ish polycarbonate, which scratched easily especially with something as hard as metal, and would get microscratched over the entire screen to where they looked fuzzy, that kind of thing. Screen protectors make a huge difference with softer plastic screens. When the protectors got scratched and fuzzy you just replace the protector.
With these new phones, screen protectors are more or less a waste of money, yet people still get 'em and put them on. Some because, "Well, that's just what you're supposed to do, right?", some because it makes them feel better (and it's a cheap
feel-good), others because they don't realize that the protectors don't really do anything, and others because they more or less know a protector won't do anything for Gorilla Glass, but carry their phone in their pocket with their keys and change (so I do when out of the truck) and are so anal about scratches that for $12 it couldn't hurt.
The screen protectors do have one benefit, though, the screen won't look as oily and smudgy (from your fingers) and you won't feel like you need to clean it all the time with a microfiber towel or something. I got over that obsession after about two weeks, and now clear it when it needs it rather than when it's got the slightest finger smudge. But mine is 18 months old and the screen is pristine.
Here's a poll with plenty of comments that illustrates all of the above.
DO you have a screen protector on? - Android Forums