I would say grad school attire is a bit nicer than undergrad, but still not "business casual" (which makes me think of polo shirts--ick). In my master's program, it's really easy to see who the students are who've just come straight from undergrad, vs. the students who are older (no more ugg boots, please). Also, if you'll be teaching, I think it's important to dress nicer, especially if you look young. I wouldn't want anyone to confuse me for an undergrad when I walk into a classroom to teach.