The clothes we wear in dreams represent the facade we [hope to]
present to the outside world. If the clothes we wear are shabby that
means we feel we are inadequate to deal with others in a social setting.
If we are overdressed for the setting, it may be that we need to tone
down the facade a little, it is preventing any real contact with others.
But the dreams we most often remember and remark upon are the ones
where we're not wearing anything, and suddenly discover it in public!
This is not a sign of latent exhibitionism! It simply means that we
have realized that some pretense we had thought we were using to fool
others, is not really working. The world has "seen right through" us
as it were, and we feel vulnerable.