My impression from what I've read and conversations I've had with friends who went to Bais Yaakov is that there are two frequently cited prooftexts for the importance of tznius. Particularly, for the primary importance tznius is given in frum women's religious life.
The first is the story of Kimchis. As the story is told to talmidos, Kimchis was zoche to have all seven of her sons serve as Kohen Gadol. The rabbonim asked her what she had done to merit this honor, and she replied that the beams of her house had never seen her hair. This proves how important tznius is. If you are careful about tznius, the girls are told, you will merit great things. Things like all of your sons serving in the highest religious position.
Unfortunately for those who want to use Kimchis's example as a guide to the ideal way a bas Yisrael should behave, there is more to the story. There are two versions of the story, one in the Yerushalmi and one in the Bavli. They have similar outlines, but different details. In both stories, there is a woman named Kimchis whose son is the Kohen Gadol. He goes for a walk and some spit from a person he is talking to lands on him, making him taamei, and one of his brothers performs the avodah in his place. The names of the sons, the people the Kohen Gadol talks to, and the circumstances of his excursion are differ between the two versions of the story.
The differing details, including the name of the Kohen Gadol involved, make it likely that this was a folktale and/or a polemic rather than something that really happened. Both versions are subtly critical of the Kohen Gadol, and the story revolves around an issue of tumah and tahara, which was a point of contention between the Perushim and the Tzedukim. The Tzedukim, the priestly class, thought that the common people didn't need to concern themselves with purity. It you were taamei, don't come to the Beis HaMikdash, but unless you were a cohen who needed to perform the avodah, it wasn't something to be concerned about. The Perushim, who were populists, felt that everyone should try to remain tahar.
In the version of the story in the Bavli, Kimchis's son Rabbi Yishmael was Kohen Gadol. He apparently had a habit of carelessly conversing with people in the market, because twice saliva from a person he was talking with landed on his clothes and made him taamie. In one incident, his brother Yesheivav performs the avodah for him, and in the other, his brother Yosef. The Gemara quotes a bareisa that says all seven of Kimchis's sons served as Kohen Gadol, implying that Rabbi Yishmael was often invalidated for service and his brothers had to fill in for him.
This story is making fun of the Tzedukim, who claimed to be uniquely concerned about their purity. The Kohen Gadol, who should have been the most careful, became tammei all the time! So much for the Tzeduki claim that tumah and tahara were too much trouble for the commoners, concerns only for the elite. If even the most elite, the Kohen Gadol, couldn't stay tahor, then the Tzedukim could not claim ritual purity as their special concern.
The rabbonim asked Kimchis, "What did you do to merit this?" (Having all of your sons serve as Kohen Gadol.) Their question could be read as sarcastic, but Kimchis takes it at face value and answers that it was because of her exceptional purity, "In all my days, the beams of my house did not see the braids of my hair." The rabbis dismiss her explanation, saying that it was commonplace, nothing special, and none of the other women who had this practice were so rewarded for it. They refute Kimchis's suggestion that her Tzeduki devotion to purity is anything special or praiseworthy.
Kimchis, then, is not an exemplar of tznius who was rewarded for her exceptional modesty, but a foil for the rabbonim in a polemic about purity. Holding her up as a model a pure bas Yisroel should strive to emulate is to not only miss the point, but to mangle it.
The version of the story in the Yerushalmi is kinder to Kimchis, but harder on her son. In this version, the Kohen Gadol is named Shimon. He took a walk with the king on erev Yom Kippur. When a drop of spit from the king's mouth made him taamei, his brother Yehuda performed the avodah in his place. This is a stronger condemnation of Tzeduki claim of being an elite unuiqly concerned with purity than is the Bavli version of the story. Not only does the Kohen Gadol, the most elite member of the priestly class, carelessly allow himself to become tammei, he allows it to happen on erev Yom Kippur, when he is supposed to be sequestered to prevent exactly this sort of thing from happening. Nor was this a one time thing. It happened so often that all of his brothers serve as Kohen Gadol!
The biggest difference between the two versions of the story is that in the Yerushalmi version when Kimchis tells the rabbonim that she merited all of her sons serving as Kohen Gadol because her house never saw her hair (and in this version, her undergarments), they agree with her that this is praiseworthy. They praise her with the pasuk from tehillim, "Kol kevudah bas melech pnimia; Mimishbi'tzos zahav livusha," "All glorious is the princess within the palace; her clothing is of checker work interwoven with gold." Yet even here, the focus seems not to be on tznius, per se, but on reading the pasuk as describing cause and effect. The "princess," Kimchis, kept her "glory" hidden even in the "palace," her house, and therefore she merited "clothing… interwoven with gold," the clothing of the Kohen Gadol which are described as being interwoven with gold. Her care for her purity was the cause of her seven sons wearing the clothing of the Kohen Gadol. Yet even here, in their praise for her, one can detect the rabbonim poking fun at the idea of purity as a priestly concern. Kimchis's obsession with her purity might have merited her seven sons who served as Kohen Gadol, but what of the sons? They failed at keeping themselves pure.
The pasuk the rabbonim cite is the second commonly cited prooftext for the central importance of tznius for Jewish women. More accurately, the first half of the pasuk, "Kol kevudah bas melech pnimia," is repeated as a mantra for tznius. It's taken out of context and mistranslated as, "The glory of a princess is inside." A princess doesn't wear flashy clothes or draw attention to herself. She is reserved, and her glory is not in her physical appearance, but her inner attributes. Every bas Yisrael is a bas melech, the girls are told, and should comport themselves appropriately.
There is no small irony in trying to convince women that focusing on their appearance is improper with the first half of a pasuk that goes on to describe magnificent gold-embroidered clothing in its second half. This is not exactly a modest outfit. The pasuk is part of a passage describing the wedding procession of a princess. It is not a prescription of an ideal of modesty for the metaphorical daughters of the King, i.e., Jewish women to whom God is a King and Father. Rather, it is a description of a literal princess as she goes to meet her future husband in his palace.
So it seems that two of the frequently cited sources used to support the centrality of tznius in Jewish women's religious life are misunderstanding or misrepresentations of those sources. The story of Kimchis isn't a morality tale about a paragon of purity we should seek to emulate. It's a farce undercutting the Tzeduki claim that tummah and tahara were a special concern of the priestly elite. And "Kol kevudah bas melech pnimia" isn't a prescription teaching Jewish women that they shouldn't focus on their appearance, but a truncated pasuk about a radiantly attired princess that's been quoted wildly out of context.
 Yerushalmi. Yoma 1:1 (38d)
 Bavli Yoma 47a
 Schiffman, L.H. (2003), Understanding Second Temple and Rabbinic Judaism. Jersey City, NJ: Ktav Publishing House
 It's interesting that he's given the title "Rabbi," a Perushi honorific. At the same time the rabbonim are making fun of him in a polemic undermining the elitist attitudes of the Tzedukim, they also give him a title that lets them claim the position of Kohen Gadol for one of their own.
 Psalms 45