Why? Because them caring about outward appearances would signal to me that they have a fundamental lack of understanding about what factors are relevant to running a successful business.
Don't get me wrong: if an employee is visiting a customer or business partner, then yes, they should dress up. But the office should be an environment where people focus on their work instead of how they look. My philosophy: people should be able to wear anything they would feel comfortable wearing around a roommate that they don't know well. I think once you provide that guideline, people will auto-adjust towards a standard that is acceptable to everyone.