I try to have my daughter wear her fancy dresses on several occassions throughout the year. If we are going out to dinner, or visiting family, or going to any event that *could* be dressed up for, I pick out one of her fancy dresses and put her in it.
I LOVE fancy dresses and I just cant help myself! I try not to spend a LOT on dresses though, because I know at this age she may only wear them a handful of times. I also try not to get dresses that are too holiday specific... so for example last year's "Christmas" dress was red with silver sparkly dots and a satin sash. She used that dress for Christmas, valentine's day AND the forth of July (we added a blue sequined star toi the dress and a red white and blue hair-bow)
Her easter dress will be used for the second time this year- we sized it larger last year thinking she would use it to wear to weddings in the summer. It is very pretty off-white with embroidered flowers. We will try to dress her in it several times this spring and I may take family maternity photos, and "new baby" family photos with her in that.
She also has a really nice silver and black dress that she wears A LOT. I love it, and it is very functional. I think it is good to have at least one "formal" dress at any age, in case a formal event comes up (weddings, funerals, holidays, nice parties or banquets, someone graduates etc...) Picking a dress that can be used at many different occasions and still be appropriate is the key to "getting what you pay for". (think "little black dress" - but for toddlers)
And if you want to use it on an "everyday" day, just because.... do... people LOVE little girls in fancy dresses. Maybe you could have a tea party day with her, another mom and her daughter- dressed in your almost too little frilly dresses and meet up and have fun! If there is no occasion- make one!
Good luck!
-M.