I am with BEagle - smart casual.
If its not a service flying unit then a flightsuit is totally knobish.
Similarly flying instructors should not wear braid of any kind as there is no ambiguity about their authority onboard their aircraft.
I *do* think flying instructors should pay more attention to clothing/equipment though. We base many assumptions on the fact we are going to crash. In which case I would choose not to wear synthetic fibres next to skin, would like to have my mobile phone on me, would be grateful of a litre or two of water, and as darkness fell I might be considerably happier with my coat on.
I've seen plenty of flying instructors dissappear over quiet isolated terrain with nary a thought of what a chump they would be after executing a daring precision Forced Landing on the only suitable bit of land for miles...
WWW