I have performed this trick thousands of times over the past eight years, in various forms. I have developed my own version called "The Man with the Artistic Eyes," which was published in my Australian lecture notes, Beneath Hemingway's Iceberg, and will appear on my upcoming DVD.
As far as justification for the paper clip, it is clipped for one reason: to keep the folded card from coming apart and being revealed. After all, if you fold a card and leave it on the table, it will naturally come apart slightly, perhaps revealing what is inside.
Sometimes, when performing it, I give another reason:
"I don't want you to see it right now because it might freak you out," I say. "Have you ever been freaked out? [Whatever the response, I reply] It's not a pretty sight!"
However, I second the sentiments given here that audience members don't ask why the paper clip is there. Thousands of performances, and they never ask. Thus, why run?
I've studied this trick in its various forms, and different thinkers have come up with different versions of the paper clip:
DARWIN ORTIZ, the originator of the effect, uses a loading wallet. He believes that the prediction seems much more protected from tampering inside a zippered compartment. (I disagree, on the basis that a paperclip keeps the object in everyone's sight throughout the trick.) Several other magicians use the loading wallet, including Gary Kurtz in his "Hypothetical Possibilities" (which is the first trick in a Kaufman & Co. book).
ALLEN HAYDEN uses a binder clip with a folded card attached to a rubber band that retracts into the clip (not his original idea). That way, when you seemingly detach the card, you can end clean.
CARL ANDREWS remarks to the audience that he found the paperclipped card next to his bed this morning upon waking. He doesn't know what significance it has, but he has brought it along because he thinks it might be significant. His version is called "Deja Vu."
JEFF SHERIDAN's "Dream Autograph" forgoes clips completely, and switches with a Mexican turnover and a red/blue double-backer. It is beautifully economical, and if you're looking for justification, none is required. (It's on his videotape.)
JOHN BANNON has quite a remarkable version on "Smoke and Mirrors" called, I believe, "Tattoo You." He doesn't use a clip, either, but instead, hides the original back and then executes a simple switch.
And finally, in my "Man with the Artistic Eyes," I use a small binder clip. However, I also sell a tiny plastic frame, which fits the folded card quite nicely. I searched for a couple years for a frame that would fit my requirements. I use an art theme, having the spectator draw a picture on the card instead of signing it.
This has an added advantage: I don't want people to think that I forged their signature, and some people jump to that conclusion. If I procured their signature beforehand, I could conceivably (in some people's desperate minds) have forged their signature on another card. Forging, after all, is a known phenomenon. But if they draw a picture of their own choosing on the spot, that completely eliminates that possibility. If you're paying attention to details, this is one that is worthy of your attention.
In my own lecture notes, I devote nine single-spaced pages to detailing the various iterations of this trick, analyzing each one and giving comparative advantages and disadvantages of each. This is a trick worthy of footnoting, I believe, and there has been some great work through the years on it.
However, all this talk of the clip obscures what I believe to be the most important point: If you're worrying so much about the clip, you're not thinking about other aspects of the trick that are much more important.
For example, when you pull the card off the clip, which hand moves? The hand that contains the switched-in card should be the one moving, because spectators' eyes follow movement. In addition, your eyes should be following that hand.
Most importantly, you should be casually pattering, completely without pause, during that moment. There should be no alarm or anxiety in your voice at all. This complex moment is what you should be spending your time perfecting, not worrying about a justification for the clip.
This is a great, great trick. Don't tell anyone else about it, all right?