Unfortunately, it hasn't gone away since MMOs became all growed-up and mainstream. Clichéd chain-mail bikinis still abound, even though the games are played by many women and, well, how can we put this ...
Game companies rightly get a lot of grief for this, so a popular work-around has been the introduction of appearance slots in the game, to allow the players to choose their look, rather than have it dictated by the designers. Unfortunately, people are still people, so they don't always do what others might hope. Here's an example from Rift today (Rift allows you to have one set of gear for stats and another for appearance).