Children should go back to being cute, simple, and happy. The standard thought of children's clothes are so awesome looking, I think, even for adults, though, that's rarely seen. I don't think <i>anyone</i> should wear excessively revealing clothing. We wear clothing for a reason, right? I don't see how anyone can do that to themselves.
Such modesty is a good thing, I think.
As for who to blame... it's the parents mostly, but designers who fill the stores with their garbage anger me. In pretty much all manners of clothing these days, not limited to childrens' clothes.