If MIA went shopping in Sri Lanka, we think Central Road in Batticaloa would be her spot. They have a raucous riot of colorful clothing for sale up and down the street.
If you want party dresses they got that. The coloful, frilly dress (with matching socks) is one of the most amazing things in Sri Lankan fashion and the root from which all further awesomeness grows.
They also have stuff which could appeal to anyone, like Hello Kitty dresses, (very) colorful blouses and shirts, etc.
You might call it ironically awesome but, honestly, there is a trend towards mind-blowing color and patterns in mainstream fashion that this Batticaloa street really captures. You have to dig a bit (and negotiate) but you can get good stuff for Rs. 500 and up.
There are also shops that do colorful religious icons and portraits, and plenty of menswear shops. It's a cool street, full of cool people. They said that a lot of the stock comes from Thailand, but we don't seem to get the same things in Colombo.
All the prices are negotiable.