I cover my car in the Garage. The Jeep... well that's another story!

As for what type... snug is important, because as rrocket said damage from flapping can be far worse than from moisture. When using a snug cover it has to be a breathable material. The moisture that often forms under a cover isn't from water getting through, it's condensation on the inside that can't get out!
However, I'd only use a cover if you really need to. For example, if the car is parked under a tree where you'll get sap and/or bird poo, then yeah, I'd cover it. But if it's just exposed to rain and some dust, then as long as you've got a good application of wax, and some sun screens from keeping the inside from fading and over heating, then no need for a cover.