While I love nice clothes, I still think these people are nuts for riding in dress clothes. I can't even ride in regular shoes anymore because I feel weird without being clipped in; I almost fell over in the middle of a busy intersection riding to the train last fall.
Of course, almost all of the women I saw riding to work in Italy were dressed elegantly, in heels or boots, often holding a latte. I guess it's all what you are used to.