While I interviewed for my first job at my current employer in a suit, I've realized since then that it very much depends on your interviewer how much it matters, or whether it could hurt. I think on for a white-collar job you should wear one, though. While I got no guff for wearing one, a year later when they were interviewing to fill my position (I was moving from product support to software engineering, the interviewer was not the same one that interviewed me), a candidate that came in in a suit was thoroughly mocked by several in the Support dept. after he left for doing so. Frankly I think the suit was part of the reason he wasn't considered, as in "he wouldn't fit in with us" / "too uptight", which I thought was a rather stupid conclusion and told them so, to no avail.
I think that scouting out ahead of time how the employees dress, then dressing a level up can work well. If the employees wear jeans and t-shirts, wear business casual, if they wear business casual, wear a suit, etc. I think no matter how you dress there will be the occasional interviewer that thinks you're overdressed, and the occasional one that thinks you're underdressed. For a white-collar job I think a suit is probably the safest on average. For a blue-collar, I think business casual is pretty safe.