I generally wear jeans and a nice shirt. I grew up wearing suits and ties to church on a regular basis. This was the expectation because people were supposed to look their best for the Lord. Most of the people who grew pushed this attitude grew up in a time in which suits and ties were worn to work and ball games. In other words, it was their daily garb. I've not worn a tie in nearly two years for any reason, and can't say that I miss it. I also found that many times while wearing suits, we just compared their suits as a status symbol. I've frequently taught in jeans and a button-up shirt. Most people in my generation are more comfortable around people dressed in this way.
James said not to give the best seats to the best dressed or wealthiest, so that kind of shoots down the idea that the people with the best clothes are closest to the Lord. I would say that modesty is important at church and elsewhere, however.