Experience speaking: line the holster . . . for 2 reasons, it protects the firearm better than any product you can put on the flesh side of a holster (unless it is one of those plastic-fantastic firearms that you can't really hurt) and a holster made of two 4 oz pieces instead of one 8 oz piece . . . will ALWAYS hold it's shape better and longer.
Don't line the straps . . . but make sure you pick really good leather for the straps with no fur balls or trash on the flesh side. Also give the flesh side a good coat of Resolene and then work the straps so that they are supple.
Also make sure you give the holster . . . straps . . . mag carriers . . . all of it, a single good coat of neatsfoot oil on the hair side only of the leather . . . after you have created it . . . but before you dye it. Let it hangout for at least 24 hours . . . then dye and finish.
THAT process makes a good looking and good wearing rig.
May God bless,
Dwight