We've been many times and have never worn costumes. We want to be comfortable and my daughter's idea of a costume is her favorite dress and saying she's Princess Diana. We are going to the Halloween party for the first time this year - so we will be dressing up for that!
The majority of kids do not dress up in Disney world for regular days. There will be a random kid or two in pirate garb and several more than that in princess clothes, but it's really not a lot so your child won't feel left out. The majority do not do it. On the other hand, if your child wants to dress up, it's perfectly fine!