I feel you should dress appropriately for the aircraft you are flying. It is completely absurd to be flying a 152 in expensive dress clothes and a tie. I feel that you should be dressed to hike back to civilization after you put it down in a field miles from the airport. At my school the price of an instructors clothes is inversely proportional to their teaching ability. The thing is the students can see right through that and will go after the instructor who can teach not the one who looks like he just dropped a grand at Nordstroms. I personally wear some nice inexpensive slacks and a polo or woven shirt, and I don’t really care if I get hydraulic fluid, oil, or grease on them while preflighting. The thing I get the most crap for is my shoes. I wear some nice all black Etnies that are about the most comfortable shoes I have worn. They are also a whole lot safer then wearing nice dress shoes with no traction. I flew with an aerobatic instructor who almost ground looped a Pitts because his foot slipped off the rudder peg at a bad time.