Basic Style Improvements

1. Tab your code correctly

2. Use generic for loops (You're reusing i which is a little scary)

function onClicked()
    local players = game.Players:GetChildren()
    for _, player in pairs(players) do
        if (player.Character.Torso.Position - script.Parent.Position).magnitude < dist then
            local name = player.Name
            local clothing = player:GetChildren()
            for _, cloth in pairs(clothing) do
                if cloth:IsA("Clothing") then
                    local f = game.Workspace:FindFirstChild(name)
                    local s = f:FindFirstChild("Shirt")
                    local p = f:FindFirstChild("Pants")
                    local s1 = script.Parent.Parent.Parent.Clothes.Shirt:clone()
                    local p1 = script.Parent.Parent.Parent.Clothes.Pants:clone()
                    s.Parent = script.Parent.Parent.PlayerStorage
                    p.Parent = script.Parent.Parent.PlayerStorage
                    wait()
                    s1.Parent = f
                    p1.Parent = f
                    wait(5)
                    s1:remove()
                    p1:remove()
                    s.Parent = f
                    p.Parent = f
                end
            end
        end
    end
end

Address Issues

Now, some obvious problems: clothing doesn't make sense. A player won't have any useful children -- its clothing are in its Character.

You define f to be the character, but in a completely roundabout way. You also might as well use workspace[name] since you don't do error checking on f.

player.Character could be nil, too, so we have to check for that.

Also, you don't ever use the variable cloth, which is usually a big warning flag. (You instead attempt to indirectly refer to it using s and p)

s and p could be nil, but you do stuff to them anyway.

You use a lot of script.Parents, but never script on its own, so why not make that a variable?

It seems like instead you should move all the cloth objects to PlayerStorage, move the new objects in (not in the loop) and then move them back:

local button = script.Parent;

function onClicked()
    local players = game.Players:GetChildren()
    for _, player in pairs(players) do
        local character = player.Character
        if character and (character.Torso.Position - button.Position).magnitude < dist then
            local clothing = character:GetChildren()
            for _, cloth in pairs(clothing) do
                if cloth:IsA("Clothing") then
                    cloth.Parent = button.Parent.PlayerStorage
                end
            end
            local shirt = button.Parent.Parent.Clothes.Shirt:clone()
            local pants = button.Parent.Parent.Clothes.Pants:clone()
            shirt.Parent = character
            pants.Parent = character
            wait(5)
            shirt:Destroy()
            pants:Destroy()
            for _, cloth in pairs(button.Parent.PlayerStorage:GetChildren()) do
                if cloth:IsA("Clothing") then
                    cloth.Parent = character
                end
            end
        end
    end
end

button.ClickDetector.MouseClick:connect(onClicked) 

Actually though we probably don't want to store things in PlayerStorage -- other players might use that at the same time. We can just make a temporary model:

storage = Instance.new("Model")
....
        cloth.Parent = storage
....

Use Functions

We are reusing code: we use two four loops to moves Clothing, and also we also move Clothing in two other places. Why don't we make a moveClothes function?

If we're doing something 4 times, the answer is probably to use a function.

function moveClothes(from, to)
    for _, child in pairs(from:GetChildren()) do
        if child:IsA("Clothing") then
            child.Parent = to
        end
    end
end

function onClicked()
    local players = game.Players:GetChildren()
    for _, player in pairs(players) do
        local character = player.Character
        if character and (character.Torso.Position - button.Position).magnitude < dist then
            local storage = Instance.new("Model")
            moveClothes(character, storage);
            moveClothes(button.Parent.Parent.Clothes:Clone(), character);
            wait(5)
            moveClothes(character, nil);
            moveClothes(storage, character);
        end
    end
end

Now it reads very simply:

• Move the Character's clothes into storage
• Move a copy of the model clothes into the Character
• Wait a few seconds
• Get rid of the character's clothes (which are a copy of the model)
• Move the clothes back from storage onto the character