Like anything else, it's all about context, context, context.
The topless cabaret dancers in Pandemic's 'The Saboteur', perfect example of nudity done right. It's in a French cabaret, so it's location and use is tied to the plot. Could the main character have just as easily been based out of a tavern, garage, or restaurant? Sure, but they did at least have a plausible reason for using the cabaret instead. Better yet, the dancers being topless is an option, if you don't like it, turn if off and all of the dancers now have pasties instead of bare nipples. Both work within the context of the setting, and neither breaks immersion.