If you're on Google Plus and have any RPG bloggers in your circles, there's a good chance you saw this post from Gnome Stew, and a firestorm of reactions to it. I actually think the author comes close to making a few good points - and then buries them in his ridiculous angst over what other people might think of him for buying an RPG book with scantily clad women on the cover (and even more bizarrely, worrying about what they'll think of him for talking to an immodestly dressed young female sales rep at a game con. The only reason I can think of to be so afraid that people will think he's a dirty old man is if...he's a dirty old man, and the whole time he's talking to her about tank games he can think of nothing but how much he wants to bone her.)
I myself tend to shy away from overtly sexual images on RPG book covers - not because of a prudish fear of BadWrongArt, but because they don't evoke what I like in a game of adventure and exploration. When I say "overtly sexual images," I'm not just referring to immodest attire, though that generally is part of it. Other factors, such as the absurdity of the costume, exaggerated body proportions, and the pose and facial expression of the subject figure into it as much if not more. Anyway, if the primary theme of the piece is to scream "SEX!" it's highly likely that I'll pass it by, because my game is not about sex, it's about adventure, heroism, mystery, magic, and so on. Images of beautiful women (or handsome men), even barely dressed ones, don't automatically violate or detract from that theme of adventure; in fact, a certain measure of sexuality can fit right in or even enhance it. It's OK if a picture whispers of sexuality; I'd just prefer that it not shout. If the sexuality overwhelms the other elements (or if there are no other elements in the first place), it puts me off. If its primary message is not "Come explore this exotic world!" but "F*#& me now, big boy!" it's not evoking the qualities I value in a fantasy story or RPG. If the cover picture can't tell a much broader story than "Sexy Elf Babe is Sexy!" then I can't help but think that the entire product possesses a similar lack of quality and depth. Maybe that impression is mistaken, but it's incumbent upon the publisher of the work to accurately portray its content, and an overtly sexual image on a product that's not fundamentally about sex is a disservice to the work.
Here's a good example of what (in my opinion, at least) is a skillful inclusion of beauty and sex appeal as part of a greater story told by the picture, rather than ham-fisted use of cheesecake. This is the cover image of the Book of Marvelous Magic. The subject is attractive and showing some leg, definitely not lacking in sex appeal, but she also looks like a spell-caster to be taken seriously. She is not merely inviting the viewer to look at her body; she is acting as a guide to the world of magical treasures promised by the book's title. I could see her as an actual adventurer or adversary in a fantasy world, not just eye candy. (It also doesn't hurt that the artist averts the cliche of Sexy Means Boobs! Overused cliches are not bad simply because they're overused, but using less cliche ways to convey the desired theme is awesome.)
Some more opinions, of varying relevance:
I don't find chainmail bikinis and other types of revealing armor offensive so much as I find them so laughably absurd that it detracts from my ability to take the entire work seriously. An enchantress in a scandalous outfit, sure, I can buy that. A warrior princess in metal lingerie? Please. Make her a naked berserker painted in runes of protection, and I'll find her credible. If you're going to wear armor, though, then wear actual armor!
I don't object to scantily-clad characters or even overtly sexual ones, per se, so long as they're only part of the full spectrum of the fantasy world being depicted. Sex is a facet of human life, and some people really do go out of their way to flaunt what they've got, after all. I just prefer that it be part of a broader variety, not the only art in the book. You might also want to refrain from going Full Sexy on the cover. An interior illustration doesn't necessarily give the impression that it's the primary focus of the work. A cover does.
Modestly-clad people can still be appealing. In fact, they don't even have to be perfectly proportioned or conventionally beautiful. It would be refreshing to see fantasy art depicting women of plain looks, decked out for adventure, in dynamic poses, with looks of curiosity or mischief or heroic determination on their faces. That's it's own kind of allure, and often superior to traditional beauty. (Men too, for that matter, although males who lack Matinee Idol looks are a lot more common in fantasy art than less than gorgeous women, in my experience.)
I apply the same standard to male sexuality as to female when it comes to fantasy art. A male subject with wildly exaggerated muscles or wearing a plate and mail thong earns an eye-roll every bit as hard as anti-gravity breasts in an iron bikini. If he's realistically proportioned and his nudity fits with a larger story told by the picture, then it's all good.