Um... Well, Chad would shrink, and then be trapped in his shirt, that wouldn't be too awkward (y'know, besides him turning into a crustacean.). In the first book, the group had to turn away the first few times they demorphed. I guess we could morph our clothes and shoes, but that would feel like cheating to me.... I thought that was a good counterweight to all the cool stuff. I vote for skin-tight only. From what I'm picturing, A small, deformed Chad is disappearing into his shirt. Yeah, It will be kinda weird for us to deal with that at times, but I figure it'll make it more... realistic, I guess.
That's a good bit of reasoning there, Jo. Smart thinking.