Dwarves (especially children) should be a lot less picky in choosing their clothes, unless there's a surplus. If their clothes start to get holes, they should keep them, ideally mending them. If there's no spare clothes, dwarves should keep what they have until it rots off their back.
Also, clothing repair. Repairing xclothesx should require a dwarf with the clothier skill (no reason to add another single-purpose skill, right?), and about as much thread as suturing a wound uses. XclothesX should require about 2-5 times that much thread--I'm not sure about how much--and about as much cloth as is needed to bind a wound, and will lead to the object getting pseudo-decorated with small patches. XXclothesXX should require about 5 times as much cloth as binding a wound, about as much thread as suturing one, and would lead to pseudo-decoration of patches. Damaged clothes would lower in value--say, 9/10 the original (not counting decorations) at xclothesx-level, 3/5 at XclothesX-level, and 1/4 at XXclothesXX level; patches would increase the value (a small patch would be worth about 1/5-2/5 the value of the original garment, modified by quality level, while a normal patch would be worth around 1/4 the original value. Clothes could get patched several times; each time the clothes get patched, the level of damage's lowering of value is saved as an invisible anti-decoration. If this value penalty for cumulative damage reduces the clothing's value to 0 db or less, it will be stuck at 0 and the dwarf will discard it unless no other options are available.
Example: A well-crafted giant cave spider silk sock is worth 72 db. It starts to get worn, but the clothier swiftly patches it up, so no harm done. Then, the clothier gets tied up in a mood for a while, so the sock wears to the X level of wear, reducing its value to 43 db if my mental math is correct. When the sock is repaired, it gets a masterwork small patch, worth (let's say 1/5 the value of the garment) 120 db. Thanks to this masterful patching job, the sock is now worth 163 db; is shows no wear, but has its value reduced by 29 db permanently due to wear. If it is later mangled (XX wear), due to a siege killing all of the clothiers, its value will be reduced to 18+120-29=109 db; if it then gains a well-crafted large patch from a newb clothier, the patch will be worth 36 db (leading to a +156 db modifier to value for the quality of the patchwork), but the cumulative wear will have reduced its value by 83. Okay, that means that the sock is now worth more, but that's only because of the legendary patch job; if it was merely well-crafted, the total bonus from patches would be 56 db, less than the penalty for culumative damage and leading to the value of the sock to be only 45 db.
In short, legendary clothiers would weave the patches into neat, lovely designs, but normal clothiers would just make it useable and less bad.
...Wow, that was long.