1 It is the fault of our parents. When we were children, our parents discouraged us from showing our genitals at a certain point, and made us uncomfortable with running around naked. "That's parental teaching and we never quite overcome it," said Dr. Ferris.Me, I'm no psychologist, but I don't think that 'splains it. From my own experience of seeing nekkid people of both genders on beaches in Europe, I think it's really a question of aesthetics. That is, there is nothing visually appealing--and plenty that's visually assaultive (their nekkidness being literally "in your face")--about the sight of hefty, bare-assed, past their best-before date folks who are over-inflated in some bodily regions and grossly deflated in others.
2 Nudity causes conflicted feelings. "At one level we want to accept it, and at another level we want to condemn it," Dr. Ferris said. "When we have conflicting feelings inside us, that causes stress that leads to anxiety."
3 Nudity forces us to make the connection between nudity and sex. Dr. Ferris said young children will not feel the least bit self-conscious at a nude beach or a nudist colony. But when they hit their teenage years, suddenly it becomes very weird. "At that point the nude other person can potentially provoke feelings. And we become anxious because we're pushing down our feelings. What makes us anxious is not the feeling of attraction but trying to get rid of the feelings. It has little to do with morality."
Simple as that, really.
And I don't know about you but I have never--no, not even once--made the connection between nudity and sex when encountering ugly naked people on the beach. If anything, the sight acts as the equivalent of a cold shower.