It's true - dressing well does not have to be expensive. One can even buy designer gowns on ebay for unbelievably low prices.
The bottom line is that it's about respect. When you follow the suggested dress guidelines, you are showing respect for your fellow cruisers who also chose to dress appropriately.
AR said it perfectly. When one is invited to a formal wedding, one dresses appropriately. If one is not dressed appropriately, one is exhibiting a lack of respect for one's hosts and fellow guests, and, if one has manners, feels uncomfortable and out-of-place. It should be the same on a cruise ship.
Land Cruise, Britain and Belgium