Everything has beauty, but not everyone sees it. ~Confucius
There are three types of self image- how you see yourself, how others see you, and how you imagine others see you. (Clever me, I got that from Wikipedia.) All three are important for many reasons.
How we see ourself is important because we need to have a realistic idea of what our physical image is saying about us. It's not unusual to have an outdated self image- one example is the image left over from the 'glory days' of high school or college… we fail to notice that we've changed in lots of little ways. Perhaps the fear is that to admit these changes means to admit we've gotten older, less attractive. This is a totally absurd, unnecessary trap to fall into. Truth is, if you're trying to dress in clothes that don't suit you as you are now, then you simply aren't going to look your best. Better to go for looking good than looking young. Trust me- you'll wind up looking younger if you make a point of looking your best as you are now. Or better to go for looking good rather than looking 'smaller.' Or taller. Or whatever. In short, let go of that outdated, or unrealistic image in your head and accept reality- make peace with it and work with what you've got. Appreciate and respect what you've got, and thoroughly enjoy it. For one thing, I can pretty much guarantee NO ONE ELSE is as critical as we are of ourselves. More importantly, life is just too short to spend being unhappy about things you can't change.
How others see you is important for lots of reasons. If you don't put any effort at all into your appearance, and essentially just put clothes on to cover your body (the 'whatever fits and is clean' mentality) then you risk becoming 'invisible.' You not only miss the opportunity to express 'who you are' but also people just aren't as likely to notice you. No, really- literally, people are more likely not to see you. You risk saying (non-verbally) that you don't have much respect for yourself, and/or that you're not a very interesting person. And we know that just isn't true, right?? That could translate to potential missed opportunities- you may be less likely to get that job, that new client, make friends with people who you'd enjoy knowing, getting a date, etc. Who knows all the potential negatives to not paying attention to your appearance.
How you imagine others see you- ok, now it gets trickier. If I feel like I look good, if I feel like I'll make a good impression, then I have more confidence. I have a wee extra spring in my step. Maybe that little bit of extra confidence helps me take some positive risks I wouldn't have otherwise. If I feel I'm showing my 'best' self off, then psychologically I've given myself a bit more of an edge out in 'the big bad world.' And everybody needs that from time to time.
Put your crazy-best, most good looking, terribly interesting sexy-beast self out there. Make sure everyone who crosses your path can see your particular beauty. Work it for all it's worth, your whole life. What have you got to lose?