I'm not a fan of situational ethics in general, but this is a case where the method should be applied. The Catholic Church has never issued guidelines (individual bishops have made statements often on, but that doesn't carry a whole lot of weight, generally speaking) on what constitutes modesty. I used to read a traditional Catholic newspaper (can't remember which one), and they ran an article outlining "proper" attire for women, which consisted of, among other things, no sleeves shorter than a few inches above the elbow, no neckline lower than the pit of the throat, no pants at all and no skirts shorter than knee-length, no tan fabric no lace no...You get the idea. The next issue, there were more than a couple letters to the editor decrying the paper for suggesting women appear in such scandalously minimal attire. Meanwhile in tribal Africa, women go bare-breasted because boobs aren't viewed sexually in that culture.
I think the point of modesty is to avoiding cranking the engines of the opposite sex. Today, a girl in shorts that aren't *too* short and tight isn't going to turn on any guy but the most ardent sex-machine (who should probably sort out his own issues instead of expecting every woman around him to live in floor-length skirts).
And I'm not suggesting that modesty is entirely relative, or that cultural norms totally dictate what constitutes modest dress -- there is a strict minimum above total nudity that must be held to. But societal norms do play a role and how the sexes view each other. Ankle just isn't titillating.
One more thing...Modesty is almost always discussed in terms of how women should dress, but I know for a fact that if I appeared shirtless in public, no woman would be able to resist having inappropriate thoughts about the twisted-steel-and-sex-appeal on display.