Think about it, in highschool would you like it if you were the fat kid? Or the really skinny kid? Or the really hairy kid..whatver it is, people can be very insecure about the way they look and being naked is just asking for insults.
However this depends entirly on the culture, people are socialised into society, they internalise beliefs based on what they see around them. If you took a group of people, and raised them from birth all naked and they never saw clothes, they probably wouldn't be so critical and it would seem very normal to see erections and genitals and whatnot.
However whover said it might rise sexual crime has a good point. If people were naked all the time, it would be like we are living in the past, living off our primate urges of sex, food and hunting. We would be naked and sexual organs would always be around us.
Look at sweden though, they are very open about their bodies and are quite willing to rip off their tops and let other women check them for cancerous lumps, in public. Sweden has a very low teen pregnancy rate and sexually transmitted diseases.
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Eccentric! Not egocentric!