The saying goes something like, "Don't dress for the job you have, dress for the job you want." That being said, you should dress like a doctor, not a medical student.
When you're in professional attire (e.g., not wearing scrubs), men should wear collared shirts with ties, and dress trousers (no jeans...khakis are fine.) Avoid short-sleeved dress shirts if you don't want to look like Dr. Dilbert. If you're wearing a long-sleeved shirt and need to do a procedure or something, just roll 'em up. Don't walk around with the top shirt button open and the tie loose, either, even if you've been up all night...it just makes you look like a slob. White coats and name tags are mandatory. The bottom line here is, patients are trusting you with their lives...at least try to look competent.
As for looking too nice, as long as you aren't overdone or gaudy, you should be fine. Think "conservative." That means decent quality, good fit, and appropriate to the occasion. A three-piece suit is as inappropriate as a tuxedo, IMO. In fact, patient surveys have shown a negative reaction to suits on doctors...patients prefer ties and lab coats.
Those of you who are worried about being "germ receptacles" would be better served by washing your hands like you're supposed to, and cleaning your lab coats once in a while. The studies of ties and bacteria, incidentally, have never implicated them in disease transmission. Besides, if you keep them in your lab coat where they belong and don't drape them across your patients, it's a non-issue. Clean your stethoscope frequently, too...or use an antimicrobial diaphragm. You'll be doing more to reduce cross-contamination that way than by forgoing a necktie.
As far as grades go, there's another saying that goes "You only get one chance to make a first impression." You're more likely to draw fire from an attending for looking like an incompetent dufus than somebody who knows what they're doing. Dressing well also tends to have a subtle positive effect on how you feel, behave, and perform, which is always a good thing.