Yes. But... 1. This makes sense if you would be ending the relationship before it got serious. If the relationship is already serious, it would be too late to "nip it in the bud". A "bud" is a flower or leaf before it has opened. 2. You would not normally use this expression to say that an article of clothing is the proper size to fit your body. In that case you would just say "it fits me". This expression is used you mean to say that the jacket is suitable for a purpose beyond the wearing of it. You might say this, for example, if the denim jacket kept you warm when you needed something warm to wear.

"Nip in the bud" is correct if you're telling one person that you plan to end your relationship with another. You might not use the same phrase with the person you're ending the relationship with! They would understand it, but might find it insensitive or impersonal. A denim jacket "fits the bill" if it suits your needs or desires, which I assume it does.

1 - Yes, as long as you are speaking about a relationship in the early stages. 2 - Yes :)