King David danced naked before God. We can certainly dance beclothed. It is very Biblical.
It's part of a larger pattern that I've noticed. In the Catholic Church, theological orthodoxy and liturgical traditionalism tend to go together. The same pattern does not hold among Protestants.
That is, Catholic parishes that are orthodox in their moral and theological teaching also tend to shun modern hymns (which almost invariably sound like substandard pop or soft rock) and stick to the masters (eg. Bach, Mozart, Palestrina, Handel, Durufle, Vaughn Williams, etc). They also tend to shun innovative liturgical practices, such allowing female acolytes, litergical dance, lay distribution of communion, and the like, and retain traditional liturgical practices, such as use of incense. Liberal Catholic parishes that tend to deviate from doctrinal orthodoxy are the exact opposite in their choice of liturgical music and practice. If you walk into a parish at mass and hear cheesy pop music with religious lyrics passing for a hymn, and some middle-aged woman prancing around in a leotard, chances are you've walked into a liberal Catholic parish.
Yet when I compare Potestant services, it seems to me it is the liberal Protestants that tend to have more traditional services and better taste in music.
I'm not trying to get into a debate. Just giving my honest assessment.