For bake fail issues on grids which do not have Server Side Appearance, please refer to this page.
The introduction of Server Side Appearance (SSA) has resulted in a significant reduction of problems concerned avatar bake fail (ie, skin or layered clothing failing to rez, your avatar remaining a cloud, etc). SSA completely changes how avatar textures are handled, and the new process is far less prone to errors introduced by connection or region problems.
Nonetheless, problems may occur and are largely due to network connection problems. This page addresses the known issues and offers solutions.
If you have more than one monitor, and run Firestorm on any but the primary, try moving the Firestorm window to the primary monitor.
If this doesn't help, continue with the next section.
This also applies if you are a cloud.
The best way to fix this is not via the usual rebake (Ctrl-Alt-R), but instead by right clicking your avatar name tag and selecting Tex.Refresh:
This is generally the result of the viewer not loading or using all the bake data - which may be a sign of a connectivity problem. If it persists, try going to a different region, preferably a known low lag one like Hippo Hollow or Cyclops.
For more info, you can refer to this JIRA.
The first thing to try is a Tex.Refresh, as described above.
If this does not help, chances are very good that one of the textures on the (layered) clothing you' re wearing, is bad.
For more info, see this LL JIRA.
This issue can also occur if you are using a cellphone connection to access SL. This is currently under investigation by LL. For more, refer to this forum thead.
This issue can also occur if you are having DNS problems. The DNS problems usually occur in such a way that the only symptom you will see will be grey avatar textures and the problem can be intermittant. The workaround for this is to change your DNS to Google Public DNS.
If you find that a change of outfit can be seen by you, but not by others, then you most likely are affected by this issue: SUN-99. This seems to be the result of using a certain other third party viewer. Only LL can fix this issue; you will need to file a support ticket with them.