Formal or casual, you want to look like you're all going to the same place. Some things to avoid are large design patterns, writing or pictures on the front, and bright colors. You don't want to use something that will take attention away from the face. Simple clothing in solid or muted colors are best. Attempts at a session close to nap time, or before meals is not practical.
Early morning is usually the best time.
Try and not talk to the child during the session, it will cause them to turn away from the camera. Allow plenty of time to take care of last minute details. If a child becomes unhappy during the session, it's better to re-schedule for another day, than trying taking a picture you won't like.