Frankly, I can handle the occasional jacket, hat, jewellery, just one or two items per player - e.g. the player who'll be wearing a ring that has significance to the character, a player wearing a particular hat as his/her character does - but if the players fronted up dressed up fully in character it would weird me out...
And that's just characters whose mode of dress is not too far from contemporary clothing (Jeans or Tactical pants, T-shirt, army surplus jacket, combat boots - all pretty "normal" unless you start adding the shoulder or hip holster...) if they fronted up in a bathrobe and wiffle hat - or even tunic and trews - and looking like refugees from Middle Earth or an SCA event, I'd be even more worried.
Props are fine by me so long as they don't distract the players from gaming. If they spent more time mucking about with their pocket knife, iPaq, iPod (iAnything) or whatever than playing the game, I'd be rather tetchy - as, I suspect, would the other players who just want to get on with their goals.
As GM, I like to limit the props I use to occasions when they encounter something that is supposed to have impact or be more memorable/realistic than just being told. And costuming up is not practical or feasible, given the number of roles I play in a given session.
So, I don't break out the iPaq every time I say a person is reaching for their "Portable Office" - though I did show it to the players when explaining that a Portable Office looks somewhat like one but combines mobile video phone and portable computer.
If it were important in game to convey that they were being recorded in a more visceral way than just saying "the police chief is noting down everything you say", I might pull out the iPaq, take out the stylus and say - in character - "do go on..." I could just as easily pull a dictaphone from my pocket, plonk it in front of the players and say, "so, start from the beginning..."
Rest assured, the players would remember that scene...
Likewise sound effects and music - the game's not scored like a movie where we have a soundtrack for battles, another for quiet evenings, and one for in the street, but I do have some playlists in styles suitable for some of the clubs/pubs in the area and when they wander into one of them, I turn on the music. Worked a treat for getting at least one of the players into "hang out at the boozer" mode...