If we shear sheep on this server, then kill them, do bald sheep respawn as a result?
Also, do shorn sheep regrow their wool?

Animals don't respawn.

The spawning logic of non-hostile mobs is pretty much in the dark for me. The hostile mobs spawn in a certain, very logical, pattern. However, the non-hostile ones just lose me with their spawn/despawn logic.

You can read about this more at the minecraft wiki. Also, to my understanding, after 1.0, non-hostile mobs should not despawn so easily, and the sheep should grow their hair back. This is, though, all hearsay and my assumption.

As a final answer: go read the Minecraft forums and the wiki to find out exact answers.

Dubien - I didn't think so, either, but I've been seeing sheep spawning without wool, and it got me wondering.
MZL - I'll try the wiki, thanks.

Could be a bug if they spawn without wool. That sounds very strange.

Ive noticed that myself weird...........

Hmm... Are you sure animals even respawn? I had two pigs spawn on my island after the update, I thought they just spawned there because of the update.