Munich's Talbot and Runhof nailed houndstooth in their Fall 2009 RTW collection. Enough liquid distortion to nullify the obnoxious math of the houndstooth pattern. It's like stretched fishnet without any sense of vulgarity. And the typically harsh white and black monochrome is softened with what looks like cream or tan. Dreamy.
Go to ELLE to see the rest of the collection.