What about the Victor Eelstein cream and gold one she wore in France, and to the Wintergarden in New York? I loved that one for it's regal elegance! That to me is the definition of princess ( besides the Elvis one)
I can see why children would love the Sassoon dress, it is a fairy tale of a dress.
But for me, it is far too fussy.
I agree with you about the elegance, (and of course, I adored the Edelstein gown and the "Elvis" Walker creation - I think Edelstein made her some of her best formal gowns and wonder why she didn't use him more often...) However, at the young age of twenty, she was able to carry off the fairy-tale aspect of the Sassoon dress; she was newly-married, newly expecting, etc.
At that age sometimes, IMHO, a woman going for strict elegance or a sleek look can come off as dressing too old for her age. We're only young once, so why not enjoy the short time period when more fussy and fairy-tale dresses can be worn to great effect? Also, I think at the beginning of her marriage, Diana had bought into the "fairy-tale" analogy, in and of itself, and applied it to herself and Charles very PERSONALLY, as opposed to recognising it as tabloid fodder, so the gown also reflected her state of mind at the time. I think she was also at the stage of transitioning from girlhood to womanhood, as she herself pointed out about the time after her wedding, before she found her feet. I think the Sassoon dress is also perfect for that "transitional" period.
To be flat out honest, I don't think I could actually pick an "all time favourite" evening gown of Diana's. She wore such different styles at different times in her life and carried (almost) all of them off well. It's rather like trying to pick your favourite Beatles' tune! The scarlet Edelstein is another winner; there's the Stambolian cocktail dress; the Murray Arbeid cream lace and taffeta - oh, the list would never end!
It's much safer to pick her all-time worst gown and that would have to be the Dior by Galliano "slip-dress" she wore in New York City that looked like a negligee. At that point in her life, I'm surprised the Princess made such a huge mistake; you could even tell by her body language that she felt uncomfortable and unconfident wearing it. Tribute to Galliano or no - she would have been better off leaving it in the Carlyle and choosing something else!
Diana was certainly one of a kind, though, and I don't really look for the new Duchess of Cambridge to follow in her footsteps. She had a "cheekiness" about some of her apparel that just made her a delight to watch and sometimes emulate. However, I'm not one of the brigade looking for Kate to become "the new Diana"; they come from completely different backgrounds, have different builds and (I think) very different personalities. I think that probably belongs in a different thread so I'll end here before I start ranking all of Diana's gowns.