First, do wear clothes unless you are performing at a clothing optional resort.Second, clothes do carry a message. What is the message you wish to communicate. The jeans and t-shirt attire indicates that you wish to be very casual about this. It might also mean you want everyone to know you are an unrepentant hippie from the '60's. Several posters have noted that "specialty" clothes are helpful if you are giving a "specialty" performance. Certainly, the penquin suit indicates you want to respect your audience, to be respected, and you are serious about this.
Third, clothes can be a "signature" if you are interested in marketing your music. If you wear the same clothes, well, type of clothes, at each performance, your audience will begin to recognize you from a distance. The Clancy's wanted that Irish look just in case you didn't know they were performing Irish music. You could quickly recognize a picture of them without having the faces down pat.I personally think every performer should keep this in mind.
If you see three guys in chinos and broad vertical striped shirts, you are going to expect Kingston Trio style music. If you see bib overalls and plaid shirts, you are going to expect some "rural" music.
Fourth, clothes may hinder or facilitate the actual performance. Reference the poster who felt he played better in comfortable clothes.
'Nuff said.
Roger in Baltimore