Is it ok not to dress up in a interview?

I think that all depends on the type of position that you are applying for. Good rule of thumb is to at least look nice. In other words, 'dressy casual'. Nice slacks and shirt for men. For women, nice slacks and blouse and or casual dress or skirt and blouse with sensible shoes (they don't have to be high heels).

Always arrive for a work interview dressed as you would be expected to dress for the position. Should you be be applying for a cashier position in a bank, dress as you have seen others in the banking business dress for work. Over dressing is as inappropriate as under dressing. Even if you are applying for a job requiring manual labor, arrive at the interview modestly and cleanly dressed in semi-casual clothing. No jeans( no matter how expensive), no revealing blouses, no loud colors, no glitter, no running shoes, no four inch heels, no excessively long nails, no "in your face" jewelry. Be friendly and use proper English. Make eye contact when you speak. Introduce yourself using your full name. No, "Hi I'm Vicky", but rather, How do you do? I am Vicky Smith." By extending your hand, making immediate eye contact, and introducing yourself properly you will have begun the interview giving the impression of maturity and self-confidence.

dress nice but don't look messy or sloppy.

It's always good to dress up even if they say you don't have to. Dressing up shows them that you respect the interview.

i guess if she specificaly said...you don't need to. but that doesn't mean you can't look presentable.
maybe 'nice jeans' and a nice top, not a tshirt. flats for shoes.
it's a step down from dressy- jacket and dress pants.
but it isn't totally street casual.

hope that solves it

it depends on where you're applying. if it's say, a cashier at walmart, don't dress up. if you don't dress up, wear something nice and casual, semi-formal.

it all depends on what the employers say if like you said that they said you do not have to dress smart then you will be able to go casual without any worries of not getting the job or else they will not have said the you did not have to dress up :).