Different people are willing to deal with different levels of risk and therefore different levels of gear. I look at it based on my experience so far riding and crashing.
Around town it really depends on the weather for me. If it's hot enough and I'm just heading down to the grocery store I'll just toss on dirtbike knee/elbow guards, boots, gloves, helmet. If it's cold (or at least reasonable) I'm much more likely to wear more gear.
For commuting I tend to wear an Aerostich. They aren't cheap, but they're incredibly convenient. I wear normal clothing under it, and therefore can take it off and stash it somewhere at school so I don't have to walk around in it all day. At this point I tend to wear a back protector under it, plus helmet/gloves/boots.
For spirited riding I recently picked up a cheap used 1 piece, which certainly isn't perfect but will probably provide more protection than the 'stich if I ever need it. I wear a back protector under it, as well as boxers and a tshirt. If leathers fit right, you can't fit pants under them so they aren't too convenient for commuting in. They're also shaped in a way that makes them fairly uncomfortable to walk around in - and I can't reach up much past my shoulders with them on, at least not if I want to be able to have kids.
Before I had the 1 piece I wore the 'stich for spirited riding too, and I would trust it to protect me in a decent get-off. I've been down a few times, but always at fairly low speeds. It's done a good job protecting me, and has taken fairly minor damage.
Good textile gear (like Aerostich) will protect you plenty well for the street IMO. However, it's much more likely that the gear will be destroyed than with leathers. A serious set of leathers (Helimot etc) will likely be fine for half a dozen 100mph track crashes, whereas the textile might only be good for one. It's also easier to repair the leathers than textile.
Gloves: get something comfortable, make sure they fit your hands right. I find that most gloves have fingers that are too short, or if I go up in size so my fingers go all the way in they're too big around. Different brands fit differently, different models of the same brand even fit differently. Sometimes there are differences from one pair to another pair of identical gloves. Try a bunch of gloves on. I've got 3 pairs of gloves I use; one fairly light pair for summer use, a heavier pair that provide considerably better protection for spirited riding any season or any riding if the temperature is reasonable, and a seriously insulated pair of winter gloves that I'll use if it's actually cold out. I got the warm pair after a few times where the last couple joints of a few fingers were fully numb after the ride into school, which wasn't something I wanted to do much. Most people don't do enough true cold weather riding to need serious winter gloves, but if you find yourself doing a lot of it they're a huge improvement in comfort.
FWIW in 3 out of my 4 street crashes my gloves have taken at least some damage. I'd say that, after a helmet, they're the most important piece of gear.
For boots I wear a pair of (discontinued) Oxtar SuMo boots that I picked up cheap. Massive ankle protection, but 17" tall and they look rather silly on a sprotbile. Find a pair of boots that fit you well and protect your ankles. If you first start out riding in shoes you may have to adjust the shifter in order to get your toe under it as well when you start wearing boots. One time I entered a corner on a road that I knew fairly well, with my foot out, and didn't see the gravel on the road. I lost the front wheel, but managed to catch myself with my foot and didn't crash. Even with incredibly supportive boots on, my ankle was still sore for a couple days. Had I tried to do the same thing with tennis shoes or wimpy boots on I would've certainly sprained and likely broken my ankle.
Also, remember: the worst gear you can buy is the gear that sits on a shelf/hanger and doesn't get used. If you buy gear that might not protect quite as well but is convenient enough to use that you actually wear it, you're far better off than if you buy the best gear money can buy but aren't willing to go to the trouble of putting it on.