The sheep I have fenced in will not grow wool after I shear them. I now have a herd of naked sheep. Lambs have wool 'til I shear them then the same.
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Sheep do not regrow wool on the current Xbox 360 version. This will most likely be added in a future update. Until then all you can do is sheer, breed, then kill (there is a limit to how many passive mobs you can have, hopefully this is removed or raised in a future update too).
Because the sheep needs grass under it to eat the grass and grow some wool.
All good now. I have 32 sheep, 2 of each color in separate pens and the rest are white. All shear, regrow proper color wool and breed same color. As well, I have a pair of pigs and a pair of cows and up to a max of 15 chickens. I max out at 11 on cows OR pigs. Also 6 wolves tamed made a pack of 9 pups.
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