I went out several times for coffee dates with somebody last year, 2/5 times he had stains or...food on his shirt. If I'd been interested in dating him I might have said something the second time happened, it did make a negative impression so really I didn't even consider him as an option after the second time it happened.
Once I went out with somebody and seemed obvious that he had slept on his hair and it "stuck that way" and he didn't bother combing it before meeting me. My inclination was not to date somebody who didn't at least try a bit for a first meeting, showing up on time, in clean clothes with no obvious grooming issues... but I gave it another shot and it turned out his hygiene was great. So I'd always give somebody a second shot if I was really interested in them, but I wouldn't be giving them grooming advice on the first couple dates...
I have felt a couple other people I've met didn't really keep to those standards either, people are just really laid back or something... Never was anybody smelly or dirty looking at least, I just get people who call 5 mins before or after we are supposed to meet to tell me they are running late, I guess I should count my blessings!
In your situation, I would probably go out with him again, and if he showed up looking dirty or smelling bad I wouldn't accept a third date and if asked why I'd summarize. I certainly don't have any desire to get into some situation where I'm wishing somebody would change before we'd gotten to a third date, I think both parties are better of just not making the effort if it's already an issue.
@BoringGuy - ok im glad ive never had to tell anybody to wash their butt!
Happiness will never come to those who fail to appreciate what they already have.