In theory, that outfit is terrible, and yet, there's something about it that I really like. I think I just like the fact that she looks "different" as opposed to just grabbing some designer dress and looking like the latest Nicole Richie clone. It's unique, but not so different that it just feels gimmicky. That outfit has a very Miuccia Prada feel to me for some reason (I have no idea who the actual designer is) and she looks comfortable, so it's great.
Plus, her hair color is amazing and the cut has a sort of Jenny Lewis vibe going on, which I think works for her.