Second favourite is Mulan. Third favourite is Snow White.

And Cinderella

MY GOSH THIS WAS SO HARD TO CHOOSE *pants* Anyway, I love the merging of cultures in this one, and I like that she isn't wearing any gaudy bangles to distract from the beauty of her dress. Aurora was a close second because her dress is just drop dead gorgeous. Pocahontas is third, also because of the merging of the cultures.

I'm not a fan of Indian outifts, most of them are kinda bad here, especially poor Belle's and Jasmine's. Cinderella's and Rapunzel's looks okay thought.

Jasmine, Belle, Pocahontas, Cinderella and Aurora are wearing Anarkali Suits - long frock styled top and slim fitted bottom.

Ariel is wearing a Sari - unstitched cloth draped over the body with a petticoat skirt underneath and mid-riff baring blouse.

Rapunzel and Snow White are wearing a Ghangra Choli with Dupatta - tight fitted cropped blouse with short sleeves and low neckline, with a pleated long skirt and a shawl or long scarf which can worn in multiple ways.

The feather is not something that fits well and usually I like more colorful dresses but I feel this is the best. It looks unique, modern and high fashion and the model wears it well. Rapunzel is the next. Snow's jewelry was my favorite.

Indian clothing is more beautiful. I would love a Disney princess film to be set in India just for the dresses. There is Shanti from Jungle Book but it was not nearly enough.

@Onyxis: I agree but I'd want the music, dancing and singing style as well. I love watching the lehenga skirt rise and spin round like a pinwheel or flower depending on the different camera angles.

Here's two examples;

Hum Dil De Chuke Sanam's Nimbooda Nimbooda: link
Devdas's Kaahe Chhed Mohe: link

I prefer the more modest outfits like the ones Jasmine, Belle, Pocahontas, Cinderella and Aurora are wearing as I think they are more graceful and gorgeous. Among those Jasmine's, Belle's and Cinderella's are my favorites. Tough calls. (Also it's hard to see Belle's since she is sitting down.)

Mulan is wearing a jacket-styled blouse with lehenga and Rapunzel is also wearing sari but draped in a different style. rest all as PrincessAyeka12 said are all correctly identified.

I like this redesign the most. I also like Snow White's.