Yep. You get a little holder and lanyard thing at the con with your bag of goodies. Or you can purchase an upgrade at the gencon store. But yes, it has to be visible at all times. The stormtroopers find you if you try to go into the vendor hall without it.
You need to have it showing in order to enter any "event" area of the con hall, the dealers room, game rooms, seminars, etc. Just walking though the con center no. This was discovered by a Foot ball coach, the hard way, a few years ago. The Indy Colts scheduled a preseason game the Sunday of Gencon (this happened several years in a row, but they finally learned not to do it) which created a great deal of issues with Hotel space (funny story about the NFL on that one). But some coach was walking though the con center and appearnlty had a run in with con security (not sure of it was Stormtroopers at the time) over not wearing a badge. He was also apparently upset they did not "recognize" him.
As per the lanyard, the ones that are available for free are cheep and fall apart easily. I purchased one of the "official" Gencon lanyards, and feel it was defently worth the $15 dollars. I have seen others with Origins ones at Gencon, and as such have used it at more than a dozen cons since Gencon 2006. It has other functions then just being a con badge holder, it has pockets for pens, business cards and a zippered compartments for con tickets. I since the keys to most of hotels are electonic today, I normally get two keys (you can ask for extras) and keep one in my wallet and the other in the lanyard, so I canalways get back into my room.
Ben