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I was caught in a situation once where the employer who wished to interview me, wanted to schedule the meeting within an hour of when he called to set up the interview. I was currently employed in the business of cutting, welding, handling, and delivering steel, which is hot, sweaty, dirty work, especially during the summer. I wanted the job so I simply advised the interviewer of my current work environment, and explained that I could make the meeting but it would have to be in my current unwashed-filthy-stinking-steel-handling state.
The interviewer said "No problem. Come on in." So I did and I got the job.
I'm not recommending that this is proper for every interview, but this interviewer had no problem with it, probably because I was accommodating his schedule.
Dress up for an interview when I can? Definitely.
Absolutely necessary to do so? Apparently not. :^)