In any Workplace demanding a dress code some employees wouldn't be satisfied, so the morale issue is individual. on the other hand, the fact that people have to wake up early and get them self ready for the proper look is an important step towards creating a higher moral.
Most people tend to wake up as late as they can just get extra minutes (!!!) of sleep, and usually they attend their place of work while they are still sleepy. The fact that you have to take a shower, shave and stand in front of the mirror in the morning, make you a better worker as I see it.
I'm not getting into modesty issues, I think my point is clear.