Hi KarieAnn!
Unless she wants to, your daughter will be fine if she doesn't want to dress up. We visited Cinderella's Royal Table when my daughter was 5, and I would say only about 30% of the girls were dressed up, and most of them were pre-school age. My daughter was dressed up for the Royal Table, but didn't dress up when we ate at 1900 Park Fare or Akershus, both princess character dinings. She wasn't out of place at either of those, and a number of the other girls weren't dressed up (still princesses, nonetheless :-))
One tip though: At the Princess character dinings I've attended, when the princesses walk in the room they'll usually walk right up first to those who are wearing their costume when they enter the eating area. My daughter was wearing a Belle costume at Cinderella's Royal Table, and Belle immediately walked right up to my daughter as soon as she entered the room. I saw Cinderella also do this. Just something to think about...
Best wishes to you and your princess on your Disney trip!
Visit Walt Disney World Resort to explore the magic.
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