Working code:

$.fn.extend({
   reset: function(makeBlank) {
      this.each(function() {
         var el   = $(this);
         switch(this.nodeName.toUpperCase()) {
            case 'INPUT':
               this.checked = makeBlank ? false : this.defaultChecked;
               // fall-through
            case 'TEXTAREA':
               this.value   = makeBlank ? ''    : this.defaultValue;
               return true;
            case 'OPTGROUP':
            case 'OPTION':
               el = el.parents('SELECT');
               // fall-through
            case 'SELECT':
               el.find('OPTION').each(function(i) {
                  this.selected = makeBlank ? false : this.defaultSelected;
                  if (this.defaultSelected && !el[0].multiple && !makeBlank) {
                     el[0].selectedIndex = i;
                     return false;
                  }
               });
               return true;
            case 'LABEL':
               var id   = el.attr('for');
               var list = el.find('INPUT, SELECT, TEXTAREA');
               if (id) list.unshift( $(id)[0] );
               list.reset();
               return true;
            case 'FORM':
               if (makeBlank) el.find('INPUT, LABEL, SELECT, TEXTAREA').reset();  // jQuery's reset()
               else           this.reset();                                       // JS FORM's reset()
               return true;
            default:
               el.find('FORM, INPUT, LABEL, SELECT, TEXTAREA').reset();
               return true;
         }
      });
      return this;
   }
});

This will search for and reset any form inputs in its path. Resetting means either making everything blank, or resetting it to its defaults, depending on the 'makeBlank' setting. You can choose to only reset part of the inputs, or the entire form, or all forms on the page.

Given that this sort of functionality involves basic FORM manipulation, IMO, this should be a core jQuery method.