Why is jQuery .focus not firing?
Your formatting made me twitch, so I fixed it up for you.

Drupal JS Coding Standards

Also you weren't using a behavior, so I fixed that too:

Javascript in D7

(function ($) {
  Drupal.behaviors.textFieldClearer = {
    attach: function (context, settings) {
      var clearMePrevious = '';

      // clear input on focus
      $('.clear').focus(function() {
        if($(this).val() == $(this).attr('title')) {
          clearMePrevious = $(this).val();
          $(this).val('');
        }
      });

      // if field is empty afterward, add text again
      $('.clear').blur(function() {
        if($(this).val() == '') {
          $(this).val(clearMePrevious);
        }
      });
    }
  };
}(jQuery));