The only character that could be clothed is Laylee (yes, the Bat). And as said, there's not much room to do that.
Why only Laylee? Because Yooka may well have a camouflage ability. It'd be kind of weird to be able to change the color of your clothes as if they were your skin.
I expand on that theory in that you may have a vulnerability where Laylee is exposed. There is a "cubby" in Yooka's head that Laylee holds himself in, and when Yooka camouflages, I expect Laylee would duck into that. Problem is Yooka may not be able to extend her... ears? horns? things back and wrap around Laylee because they may be static.
That gameplay dynamic if Laylee is exposed during camouflage means AI could spot where you are if you turn Yooka's back to them.
Woaaaah, it finally came out!