。
She was wearing a plain blue dress.
Literal
She [topic-は] unadorned blue dress [object-を] was-wearing.
飾り気のない (かざりけのない, 'without decorative flair, plain') is a compound modifier: 飾り ('decoration') + 気 ('sense/air') + のない ('not having'). It describes simplicity as a positive quality — unpretentious rather than lacking. The ~ていた marks her outfit as a state observed at a past moment.