Now then, if a man comes into your synagogue wearing gold rings and dressed in splendid apparel, and there comes in also a poor man in lowly apparel, and you give preference to the one who is wearing the splendid apparel, and say to him, "Seat yourself here in the best place";
and you say to the poor man, "Stand over there," or, "Sit here under my footstool"; Then have you not passed judgment among yourselves . . .? (James 2:2 - 4, HBFV)
It is easy to understand why the average human, upon seeing someone's dress, would treat a person arrayed in fine clothes differently than someone who is not. We tend to favor someone who, on the surface, seems successful as opposed to someone who lacks even the basics of life.
We may even believe, as the first century Pharisees and religious leaders felt, that wealth is a sign of God's blessing (Satan can bless as well, see Luke 4:5 - 7). Superficial, quickly made judgments regarding whom we should accept or reject are many times WRONG because we do not take into account a person's character and heart, as James further points out.
Did not God Himself choose THE POOR of this world, rich in faith, and heirs of the kingdom, which He has promised to those who love Him? . . . Do not the rich oppress you, and do they not drag you into the courts? Do they not blaspheme the worthy name by which you are called? (verses 5 - 7).
God tells us he does not judge based on how people dress or what they physically look like but by their heart (1Samuel 16:6 - 7). Christ himself commanded we are not to judge others based strictly on their outward appearance (John 7:24).
It is important to realize that the Bible does not command us to dress according to "the upper class style of the day." Would services be better if all men wore tuxedos and women wore formal gowns? Should men always wear suits and ties? Should women always wear high heels? Should people buy clothes for church that they would otherwise never wear? There does not seem to be any biblical precedent for any of these things.
Paul teaches that the location Christians gather to worship God should not be a place where impressive clothing is shown off for its own sake (1Timothy 2:9).
While the Bible condemns a strict dress code requiring those who attend services to wear expensive or "fancy" clothes, it may be expedient (as well as required legally) to have a common sense policy regarding clothing. For example, some restaurants post a "no shoes, no shirt, no service" sign on their door. This is because local ordinances regarding protecting public health and safety require it.
Church groups, especially those who meet in facilities they do not own (e.g. Hotel meeting rooms, banquet halls, etc.) should adhere to the appropriate attire guidelines and laws of the place they meet at and any local code.