If I am travelling to an Islamic country, I always wear at least 3/4 length trousers or skirts which reach well below the knee. I tend to wear loose tops which come down to my elbows at least, and don’t show too much neck or back. Looser clothes are cooler. I would say your outfit is fine, modesty wise, although I would go for looser styles in general because of the heat.
I judge whether to wear hijab or not depending on the “feel” of the place, but I usually take a few with me to match to different outfits (just like the local ladies do). You will generally need to wear hijab to visit religious sites, burial sites, and some historical sites.They can also help to keep the sun off your head.
You won’t get arrested for not covering up in Dubai (except in highly unusual circumstances) but you don’t want to get stared at, either, and you don’t want to encourage the stereotypes that some local men will have about Western women (*sigh*).
When asking for directions, or sitting on buses, remember that men usually speak to men, and women usually speak to women, so if you are sharing a public space where a lady is seated, it would be better for you to be seated next to her and your husband on the other side of you, for example. If you wish to ask for directions or a favour (“can you take a picture of us, please?”) then you should ask local ladies, and your husband should ask local gentlemen.
If you wish to swim or bathe in a public (mixed gender) place, do so whilst fully clothed… the other local ladies, if they swim at all, will usually also be fully dressed. You will soon dry in the sun.
The answer is that you are unlikely to be arrested, but good manners and respect for the customs of others go far beyond what you will or will not be arrested for… and I am appalled by the disrespectful behaviour of many expats I meet in my travels. Go with an open mind and a respect for others, and you’ll be just fine.