Leather poses less of an ethical problem because it's essentially a by-product of the meat industry. And on a more immediate level, I guess it's less squicky to wear a part of an animal that you don't recognise than it is to eat a lump of shoulder or something.
My family has a farm. Every season, there's always around 7 or 8 lambs that have to be hand reared because their mother's too sick or whatever to take care of them. I'd always assumed that when they were old enough, my dad would send them off just like any other animal. Turns out that he doesn't. He keeps them around, just because he can't quite bring himself to do it to those guys. Aww. Bless his secretly sentimental old heart. 😀
I'm not a vegetarian purely because I really don't think I'd eat enough to survive healthily otherwise. Lot of respect for vegetarians though, it's not easy.