For shorter rides in town, I don't need specific clothing aside from a helmet, which is not an option. I will often use the shoes for my clipless pedals, but these are also comfortable for moderate amounts of walking and they don't look too far out of place.
When I do the longer rides, the cycle specific clothing comes out. The shorts, however, are not the traditional skin-tight cycling shorts. Instead, I use touring shorts, which have a looser fit and can pass for walking or jogging shorts.