OMG! DON'T USE "THE PAD" OR YOU WON'T GIT SWOLE!
It is dogma. Simply dogma.
Seriously, are you really any more of a man (or woman) if there is nothing between you and the whopping 135lbs of weight bearing down on you? Does the "maxi-pad" (as many internet bad-asses call it) make squatting worthless? A manta-ray, like the one pictured above, is secure to the bar and allows people new to squatting to have one less thing to worry about.
Squats of all kinds are great - you just have to understand them. A manta-ray squat places the bar in a very high-bar position and thus requires a more upright squatting style. As long as that is understood and accounted for technique-wise, there is absolutely nothing wrong with the manta-ray variant.
On the other hand, I'm not a big fan of styrofoam tubes with a nylon and velcro covering. I believe that the padding on the bar reduces proprioception - you can't "feel" the weight until it gets pretty heavy, couple that with a slick nylon covering and the possibility of the bar rolling down your back is greater. Not something I'd ever want to risk unnecessarily. A towel is not any better either. If you are in need of some kind of padding (for whatever reason) and you have a choice, go with a manta-ray, or safety-squat bar, or Dave Draper's Top Squat.