I use a Belkin slip case worn inside my front right pocket with the clip on the outside of the pocket. I used to just have it laying loose in my pocket, but I had one too many mini-heart-attacks when I do the proverbial "pat down" when I get ready to leave somewhere after sitting down for a while.
I'd pat the front of my pocket while the iPhone would have squirmed its way to the side of my leg, thus making me get a rush of adrenaline for a second when I'd start thinking my phone is missing. I really don't like that feeling, it makes my hands shake, so I started using the slipcase in my pocket to keep the phone where I pat down to check my belongings before I leave a place.
And yes, the screen faces my leg. Is there really any other way?
usually front left pocket... however it goes in is how it sits. no case, just the screen film. i usually carry my vibe ear buds in the same pocket too, but in the pouch they come with. I sometimes have other stuff in there, im not too paranoid, but never my keys.
I usually carry it in my left pocket, screen against by leg, and usually top facing my feet, though I am trying to get into the habit of facing the top upwards so that I can press the sleep/wake button as I take it out. It is protected by a film cover and an incase-black-leather-case-thing-with-a-belt-clip. I carry my keys and inhaler in my other pocket.