Do car covers cause damage to paint jobs?

Unless you keep your car very clean (dust free) all the time. Putting on and taking off a car cover will absolutely have a negative effect on your paint job.
Since you have no real choice (or garage), then keep it waxed, keep it clean, and try not to drag the cover over the the paint-job when wrapping or unwrapping.

Basics: (1) always wash your car in the shade. (2) wax a car only when the body is cool. (3) once waxed, avoid using strong soap when washing your car. (4) keep a "car duster" brush in your trunk. It will help you keep your car clean between washes.
I would also not recommend using an electric buffer when waxing a clear-coated car (as the IS is), unless you know what you're doing. They look easy-to-use; they aren't!
A good cleaner/wax, such as Meguiar's, is easy to apply and buff up by hand.
Finally...the darker finishes are obviously harder to maintain than the lighter ones. Black will show every little swirl and mark; Silver doesn't even look dirty when it is dirty.
If you haven't guessed already, my IS 300 is Silver.