Whats wrong with this script?

It looks like you're nesting all your if statements. The clothing:Destroy() will only be reached if there is a face and there is a head mesh and there is a shirt. This is because of the way you organize your ends. Because you put them all at the end, the statements are all nested within each other. Instead, try

while true do
	wait()
	for _,v in pairs(game.Players:GetChildren())do
		local hi = v.Character.Head:findFirstChild("face")
		if hi then
			hi:Destroy()
		end
		local mesh = v.Character.Head:findFirstChild("Mesh")
		if mesh then
			mesh:Destroy()
		end
		local clothing = v.Character:findFirstChild("Shirt")
		if clothing then 
			clothing:Destroy() -- Problem here
		end
	end 
end

Now it doesn't matter if there is no face, for example. The end for that statement is immediately after the hi:Destroy() action, and the code will continue after that end regardless of if the condition is met or not. This way, the next if statement is not within the code for the previous if statement.