Forsworn armor has the same starting armor rating as standard leather armor, so it's just as effective, despite its ridiculous looks (no doubt a nod to the traditional chain-mail bikini trope). You only need leather and smithing skill to upgrade it. The skimpy version of fur armor is similar (topless for men, tube top for women, same armor rating as hide, I think).
One thing about Forsworn armor is that people in places like Solitude and Markarth may comment negatively on it if you wear it around town, but it doesn't actually affect how anyone treats you. I roleplay it; my character never wears her Forsworn gear in a western town.