I said this in another thread, but I'll say it again. The reaction of the audience needs to be "You know, superheroes do look pretty silly when you think about it", which is what Moore meant to say with Watchmen. It should definitely NOT be a right-off-the-bat "Are you kidding me?". Spandex would be the latter, and Watchmen would not be taken seriously, in my opinion. You may not want the costumes to be serious, but if it detracts from the tone of the movie as a whole, it's better to tweak them.
In my opinion, the specific look of the costumes in the novel are important for a few reasons, which the movie (as far as I can tell) is being faithful to:
1. They look silly, and make a psychological point about crimefighters. Check.
2. They are (in some cases) an homage to other superheroes or comic book trends. Nite-Owl II/Batman? Check. Dollar Bill/Superman? Check. Rorschach/The Question? Check. Silk Spectre/stereotypical overly sexualized female hero? Check.
3. In other cases, they are references to real-life costumes or people: Ozymandias/pharaohs/Alexander the Great? Check. Hooded Justice/KKK? We don't know yet, but it's likely.
4. They help ol' Dan Dreiberg get it on. Probable check.
Sure the costumes aren't 100% faithful, but I don't think that's such a bad thing. I'd call them 80% faithful, which is close enough for me. As I said once before, I seriously doubt that Alan Moore gave a flying fudge whether Nite-Owl II's costume was brown and gray (as in the book), or brown and brown-with-texture (as in the movie). Just as long as it's a little goofy and it reminds you of Batman, a little tweaking doesn't hurt the character.
About the "period feel" issue: when you read the GN, do you think to yourself "wow, these costumes are so 80's"? I definitely don't: to me they've always seemed pretty typical designs even by modern standards. Of course, that's just me. The art style is definitely a throwback to the silver age, but the costumes aren't very 80's-specific at all, in my opinion. The only ones that have a really striking period feel are the old Minutemen costumes, and judging by Dollar Bill, we're getting that. In fact, $'s costume looks even more period-y in the movie than it did in the book.
Basically, in my opinion, the differences aren't drastic enough to take away from the characters or message, and they may actually improve the movie overall. So I am happy with these costumes.