It is always cool to let employees wear something that they are comfortable when they go to work. However, dress code is still important because we still believe that everyone who works in your company represents the company himself.
A casual dress code like jeans and t-shirts are still acceptable; however, when an employee comes in with a ratty sweatshirt or dirty hair and someone already complained about his appearance. You know that you need to address that to him, but it will be very awkward. How will you talk to him?