Well, Ted, My first thought was that the kind of attire you described is exactly what I see on Saturday Night Live every time they have a young rock band on as their special musical guests!  Or what you see whenever Willie Nelson and his pals perform.
 

Mst of my gigs are for senior facilities, and many are theme programs.  For themes, I dress in character (as LTS said)-- Baviarian style for Oktoberfest; Mexican for Cinco de Mayo; green for St. Patrick's; red and green for Christmas; red-white-and-blue for July 4th; red for Valentine's Day; a black dress with a witch hat for Hallowe'en; jeans, boots, and a cowboy shirt for "Western Days," etc.  It it's not a theme but it's a more formal program -- like a candlelight dinner-- I usually wear a long, colorful skirt (usually a lightweight cotton) with a solid color tank top [most often black, and colorful earrings.  If it's casual, it's the same kind of tank top with lightweight cotton or rayon slacks.  Wherever I perform, it's always sandals, Birkenstocks,  or some other flat shoe -- seldom tennies, and NEVER high heels, since I perform standing up, and I value my feet.  I seldom wear a really formal kind of outfit because suits are way too hot when I'm moving around and I don't own any cocktail dresses--and they look stupid with Birkenstocks, anyway!

I usually dress in layers, since I never know what the temperature is going to be.  I tend to incorporate vivid colors into my attire because--well, because I LIKE vivid colors (as opposed to mini-prints and pastels and beiges)--and because it wakes up your audience.  But I do like to wear something that I can mover around in comfortably.  (You can see my typical layered casual performance outfit in the personal photos section under my name.  I'm the one without the beard.  The pic from JenEllen's Mudcat gathering --in that thread --this July shows my 'dressier' outfit--i.e, salmon colored pants instead of gray.)

One more thing that I learned from my earlier life as a drama student:  if I'm going to be under spotlights, I wear more make-up than usual.  If you don't, you'll end up having no face when that spotlight hits you, unless your features have very strong natural definition (like Brooke Shields's eyebrows).  If I'm singing in a small, casual, venue, I may not wear any at all, except maybe lipstick.   [I'm not suggesting you guys follow suit.  But  you probably know that a lot of performers on stage, screen, and TV are heavily made up, so they'll look "normal" under the lights.]

Moonchild, I used to take my guitar out to the nude beaches at Rooster Rock and Sauvie Island near Portland, OR, and play with nothing on but the guitar.  Problem is, the damned guitar sticks to you!  (So, actually, I usually had a towel between me and the guitar.  (Then I developed a malignant melanoma... .)
One thing I do try to avoid is flashing the audience (cleavage, crotch, etc.)  You want folks to watch your hands or your lips, after all!