The same thing that made Tifa decide to fight in a miniskirt, I'd imagine.
...Illogical character designers.
Alternatively, it's been suggested by some fans that it was her wedding dress, though I don't see why that would be important enough to her to decide to wear before sealing herself away forever, especially when Hojo obviously didn't hold that much importance to her. Also, it doesn't seem like she had an actual wedding ceremony for several reasons that I could provide upon request.
I think they just wanted her to look beautiful and ethereal, and dressed in white to represent the purity and hope that she holds in Vincent's eyes (or maybe innocence and virginity for ironic lulz), and that it's just a visual aesthetic thing.