On the topic, if the game is rated : Mature Only, i think nobody would complain to see a penis, the real question is "do we need to see it?", because, that'll add nothing to the game, excepted for "Lawlz, they added a penis!", and IMO, there are a lot of cooler stuff to put in the game instead of a penis lol.
As stated, there is an implant called "Mr Studd" or "Midnight Lady" for the women, enhancing their sexual organs, so they'll probably put genitals in there but i doubt it will have much impact on the game, it's just for the RP, or the fun, or if you're as twisted as the players in my Cyberpunk 2020 game, to make suffocate people by putting your penis in their mouth until they asphixiate lol.
But otherwise, it's not really the most useful tool in the box.
EDIT: I just thought about something, maybe your clothes will be rippable (like in fighting games nowadays), so that could show some parts of your body like this
http://i55.tinypic.com/2lvb6df.jpg
If there are dismemberment, with specific hit boxes, it's a possibility, it would be fun to see your weaved skin scorched and scratched as for your clothes whou could be ripped off during a fight.
Maybe people could react to the fact you're almost naked like "Go dress yourself bum!", or hiding the eyes of their child "Don't look" ahah.