Now, obviously everyone anticipated that the nudity would be a hot button issue - the developers already added an option to turn off nipples in the game. The source post in the forums though does add a decent option - simply a switch to give ladies bras for players who would like to play the game without the nudity.
1UP, however, went a step further and created some pretty funny ways of blocking out nudity in AoC. If you haven't dropped by yet, you should check it out. They have a considerable amount of fun with a simple black bar.