I just think it's one of those things which is innately wrong. Just looks a bit naff to me. An exception might be a yellow gold vintage Sub or similar, but all that would do is prove the rule. A tropic or rubber strap would be more appropriate if one wanted something shaped like a traditional watch strap.
edit: Hmm, Panerai would be another exception, and leather on vintage/reissue watches looks better than it does on modern stuff, but I would still stick by 'no leather on divers' as a good principle.