You can get the SVN with this feature at Graphicall.

Sample of what it can do starting from simple primitives and Victoria 4:

And then we turn on the modifier...

As you can see, the biggest shortcoming of this method has to do with symmetry and with the neck and armpits.  

The former problem can be solved by using the mirror modifier and a half-mesh until all the symmetrical details are finished.  The latter one is helped by the fact that, while the modifier is on, you can still make changes in edit mode (as usual for Blender).

With a bit of smoothing and scaling:

It's by no means a magic bullet, but it is quite a tool to add to the modeler's arsenal.  This simple dress took 30 seconds to make, and looks it, but with a bit more time and effort invested you can get quite nice results.

I used this to help create my Wrath of Athene product, particularly the breastplate and sandal soles; the skirt was made using the cloth physics.