Lyric discussion by spacexoddity 

Cover art for Pretty in Pink lyrics by Psychedelic Furs, The

I'd tend to agree with the theories of a promiscuous teenage girl than the transvestite simply because there seems to be more evidence in the words.

Caroline laughs and it's raining all day (She laughs even though her life isn't great, and it's 'raining')

She loves to be one of the girls She lives in the place in the side of our lives Where nothing is ever put straight (She likes to feel like she fits in, and flirting and having sex with guys makes her feel that way. 'The side of our lives' means she's not an important part of the lives of the guys she has sex with, and the situation between them is 'never put right' because she feels for them and they just see her as a meaningless booty call.)

She turns her self round and she smiles and she says "This is it that's the end of the joke" (Maybe chatting up a guy in a bar?)

And loses herself in her dreaming and sleep And her lovers walk through in their coats (Dreaming of better things, maybe where guys actually like her rather than just use her.)

Pretty in pink Isn't she (To me this feels either ironic or, like someone else said, a reference to being naked.)

All of her lovers All talk of her notes And the flowers That they never sent (This sounds to me like she was thinking there was something serious with these guys, so sending them love notes that they ignored. 'Flowers that they never sent' shows that they didn't care about her enough to send her flowers.)

And wasn't she easy And isn't she Pretty in pink (Pretty obvious- an easy shag, basically. And the guys commenting how good she looks naked?)

The one who insists He was first in the line Is the last to Remember her name (She thinks the guys genuinely care about her when in reality, they don't even care who she is. They'll promise her the world and then abandon her when they've got what they wanted.)

He's walking around In this dress That she wore She is gone But the joke's the same (Stealing her things and taking the piss out of her, even further emphasising her not being accepted)

Caroline talks to you Softly sometimes She says 'I love you' and 'Too much' (She attempts to give her casual encounters some level of romance, without much sucess.)

She doesn't have anything You want to steal Well Nothing you can touch (Perhaps she's not so well off, which makes her the way she is. There's nothing these guys want from her except what they've already had.)

She waves She buttons your shirt The traffic Is waiting outside She hands you this coat She gives you her clothes These cars collide (Waving goodbye to yet another guy who is leaving straight after getting what he wanted. She is obviously beautiful as the traffic stops for her 'These cars collide'. Maybe the writer was trying to imply that she was better than that and just had to relaise it.)

@spacexoddity

I think your interpretation is probably the closest but one part I think you got slightly wrong.

The part of the song that talks about:

She doesn't have anything You want to steal Well Nothing you can touch

I think that's referring to her virginity; in the sense of taking or stealing someone's virginity, meaning she's already lost her virginity so there's nothing to to take or steal from her.

And the "well, nothing you can touch" is referring to how her virginity is not an actual object or thing you can physically touch to steal or take it...