i vaguely remember them trying to launch a clothing line, but i might have them confused with the Youtube fellas?

You remembered correctly. That was Jack. It was after he got booted from Twitter the first time, and is in the book but not this excerpt:

When Williams overthrew him as the company's CEO, Dorsey was hurt. 

He was so hurt, Bilton says he nearly went to Twitter's greatest competitor, Facebook. Mark Zuckerberg had been trying to buy Twitter; Dorsey personally informed Zuckerberg when he left Twitter. That led Zuckerberg to make him a job offer, but not for a specific role. Dorsey worried it might look like a demotion.

Bilton writes:

Facebook had been quietly exploring the possibility of buying the fledgling company, and while Dorsey was intrigued, Williams was not. The day after he was ousted, Dorsey called Zuckerberg to confidentially share the news. To Dorsey’s surprise, Zuckerberg asked if there was a way to prevent the firing, perhaps in order to save the deal. Dorsey assured him that there wasn’t, and Zuckerberg switched his plan from trying to buy Twitter to trying to hire Dorsey. So Dorsey met with Chris Cox, who ran Facebook’s product division, at a Philz Coffee in San Francisco. The discussions soon became more serious. But they didn’t have a specific role in mind. Zuckerberg wanted Dorsey to simply join Facebook in an unspecified capacity, and they would worry about a position later.

As he weighed Zuckerberg’s offer, Dorsey began considering the consequences...Twitter’s embarrassment might prompt a leak about what had really happened. Of greater concern was the appearance of joining Facebook without a significant job title. Would that look like a step down? “Let’s just keep talking and see if we can find the right position for me,” he told Zuckerberg. “I’ve got to think about this.” 

Read Bilton's full excerpt, here. Or buy his book, here.

this is going to be one of the juiciest business books of Web 2.0+/The Mobile Web... yes, it was amazingly timed, I wonder how long he'd been working on it and if it just worked out this way.

Years. He hoped it would coincide with Twitter going public, and he got lucky on the timing.