I think it all just depends on you. I, for instance, know that I look fairly young, especially if I dress casually. So, to present myself as a professional worthy of the respect 18-year olds so rarely give, I dress up more, especially for the first few weeks. I'll wear skirts or pants, but I am usually dressed up more than most of the other teachers. After I get to know the personalities of my classes, I'll often break down and wear more casual clothes, sometimes even jeans. It just depends on the class and how they'll take it. But even when I dress more casually, I make sure I'm 'put together' and have make-up and at least some jewelry on. You'd be amazed at how that takes you from some TA to their instructor!
But, then again, some other TAs dress very casually and seem to do just fine...especially the men! So, I don't see anything wrong with dressing nicer or more formally as long as it suits you and your personality. Although, I'm just a TA, what do I know about fashion?