It's not cruel to my dogs since they're so used to it. I don't dress them up for Halloween as often as I used to, however, my 9 lb. Yorkie loves the fleece jacket I put on him in the winter. Not only does it keep him warm, it keeps the snow off his hair on his belly.
I think if I hadn't put items on my dogs since they were puppies, the probably wouldn't take to them now that they're older.
So, is it CRUEL to dress up our furry friend? No - those dogs loved by someone who cares enough to bother to put clothes on them. Cruel is how some people abuse and neglect animals.