Wear clothes that are comfortable.
Don't wear clothes with big words on them.
Wear colors that compliment your complexion. Even if yellow is your favorite color, if it makes you skin look yellow, then please choose another color--like brown. Don't wear light grays if you have a light complexion. They will wash you out. Bright colors are nice.
Don't wear clothes that are very "faddish". You'll have these pictures a long time and you don't want them to look dated just a year from now.
Wear clothes that are flattering--not blousy, big clothes that may be comfortable but that hide you.
Wear shoes that are comfortable to move in. For gals--if you choose to wear heels (which can be flattering), wear ones you can walk in and stand in comfortably--don't wear ones you feel stilted walking in or which you feel like you're going to topple over in. Your comfort level will show in your pictures. For guys--wear shoes that are in good shape.
Fix your hair the way you normally do. You'll feel more comfortable during the photo session and the pictures will be more reflective of who you are.
Not everybody in the picture has to match. I have to be honest. I actually prefer it when people don't. Then, everyone is wearing clothes that are reflective of their own tastes. I find that the pictures actually look better this way! Although, I still like the same color palette pictures if that's what you like when you look at a family portrait. I just like the others better. I don't recommend having everyone wear the same color, ie. all in black or navy blue. The same color tends to make people blend together and you can't tell where one person's arm ends and the next begins!
For women, wear clothing that covers bra straps and isn't likely to slide off your shoulders. Wear clothing that doesn't have too low of a neckline or gaping arm holes. Once I took a great picture and was so sad when I saw afterwards that the child's neckline was too low!
Recently, I found this great post about what to wear for family portraits. You can find it here.