K.D.
We had this exact same problem with my son, and are now in the midst of it with my daughter. For my son, we did the naked thing and he eventually did sit on the potty after seeing it go on the floor, but the poor little guy was terrified. He soon realized it wasn't as scary as he thought, but it did take him quite a while to actually get comfortable with the idea.
Right now my daughter (2.5yo) pees with absolutely no problem, but she WILL NOT poop. No bribes have worked. I'm looking for ideas too!
Good luck. I guess we'll all get to the land of no diapers sooner or later.