Clear search history does nothing in 4.0.1. 4.0 is a big step backwards.
I just installed 4.0 and do not feel that the UI is an improvement. In any case, when you click on the down-arrow on the search widget, you get a list of previous queries. At the bottom of the list is "Clear search history". When you click on it nothing happens and the list is not cleared.
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It is possible that there is a problem with the file that stores the "Saved Form" data.
Rename or delete formhistory.sqlite (plus formhistory.sqlite-journal and formhistory.sqlite.corrupt and formhistory.dat, if they exist) in the Profile Folder in case there is a problem with the file that stores the "Saved Form" data.
This will remove all saved form data, so you may want to rename formhistory.sqlite to formhistory.sqlite.sav or move the file to another folder in case you need to recover some saved data.
I only found formhistory.sqlite and renamed it as suggested. After restarting Firefox, the search history still shows the same items as before and I can't clear it.