1) If you're careful, you can get away with wearing jeans and trainers (I often wear black 501s with nike low nike cross trainers, and various casual shirts - no one really notices/cares, especially if you're in software).
2) Suits and neat shirt/trousers tend to be the "default" and perhaps signal safety/predictability more than commanding respect (which doesn't make sense since everyone wears suits around here, and everyone doesn't command everyone, so it's a shallow heuristic to use when making quick calls on people - I know some dumb people who wear suits, and smart ones who don't).
3) I've incidentally worn very casual stuff (jeans, no suit) for interviews and then actually worn suit/tie/etc on the job later, i.e. more out of curiosity/wanting to, than obedience. I do think in some ways they can be nicer to wear. If you go more into studying design concepts, you start seeing some good elements in play within the standard template of what constitutes a suit (shirt, blazer, tie, boots, cufflinks, etc). Is there a better alternative? Not sure - I loved Steve Job's outfit too, though.
Imagine the Barrack Obama whitehouse photo with him in a hoodie. It wouldn't be unthinkable for him to do this, but I'm not sure it would communicate the right message to the general public (again, perhaps it's about projecting the idea of safety, stability, predictability, etc). In that sense, suits are a good communication facilitator.
A lot of jackasses wear suits, sure, but a lot of jackasses use iPhones, for example too. It doesn't mean they're a bad thing. The bigger problem perhaps with wearing a suit is that there are so many people wearing them now, many of them doing it because other people do it, rather than because they have some pure conviction to do so, that it has become a "red ocean" strategy, which naturally goes against the flow of innovation.