What you are reading from your System.out.println statements are not indicative of what is actually happening in the Clob. You are simply reading out the default java.lang.Object.toString() method of the Clob, which in this case is outputting the instance ID, and that does not change no matter what you put in it.
You are using the Clob properly to load the String on to it, but not read the String value back. To read the String value from a clob use...
Clob clob = connection.createClob();
clob.setString(1,"Test string" );
String clobString = clob.getSubString(1, clob.length())
System.out.println(clobString);
BTW: if you are using large strings, you DO want to convert your String to a Clob, if the String is larger than the Oracle varchar2 limit and you send a simple String it could truncate the input or blow up. If the Oracle proc calls for a Clob, give it one.