I can totally relate to your fear of lycra, I started out by wearing the baggy shorts, I guess they are made more for mountain bikers but I felt a lot more comfortable in those in the beginning. They also have underliner shorts and bike briefs you might want to look at. I have never worn a bike jersey, just a t-shirt, I hope to get a sleeveless one for the summer (one of the less form fitting ones). My husband bought me a very nice pair of lycra shorts for Christmas, they are a much better quality than the baggy ones I was wearing so I have switched to those now that I'm putting in more miles on the road.

I have been to several group rides and you see every shape and size wearing lycra, that being said I still feel self conscious in the lycra shorts but my bun is much happier at the end of the ride.