Per OED:
FUNK :
tinder
strong smell, esp of tobacco smoke
funky music
cowering fear, panic, teror
person who funks - coward
FUNKY:
musty, mouldy
Jazz, down-to-earth and uncomplicated.
soulful, bluesy, syncopated
fashionable, trendy
nervous, timid.

So the language morphs again!
I take Helen's meaning and have felt that her definition is true but also think funky - as applied to clothing - would be a sort of a dress in a gypsy look at a formal party that is somehow carried off with panache.
Like the old story "She wore a kilt and everyone in satin felt overdressed."
But have used the word "funk" as in "I'm in a blue funk" - a sort of mix of melancholy and frustration - a state that passes quickly when action is initiated.
Make sense to anyone?