Why are people so offended by the nudity?
It's not like this is a children's movie and the scene was taken directly from the novel! In fact, I just finished the book a couple days ago and can honestly say that Forster wrote it pretty much exactly as it appeared in the film - even with George's "WOOOOOP!!!" in front of Lucy, Mrs. Honeychurch, and Cecil.
I can understand some people disliking nudity when it's gratuitous, or in a graphically sexual sense, but that's not how this scene was at all.
And for the record, I saw that scene for the first time when I was probably 10-11 years old, and it did not cause me any mental and/or physical damage. :)