It has happened 2 times now: in my res, when I use an egg to spawn a sheep, the baby sheep after a while starts taking damage from nothing and dies. I don't know if adult sheeps are affected because no sheep has yet become adult yet (because they die, that is.). Should be noted that i spawned them in a pit 4 blocks deep, chickens are there too and they don't have any problems.
I've had that problem too. I had a 2-high dirt wall for my wool farm, and I believed my sheep were being taken by the mysterious Minecraft chupacabra. Then I realized my stupid sheep were shoving each other into the inside of the dirt blocks, and their stupid faces suffocated. The solution is to use fence blocks for your walls.
I really believe Mojang hates animals and is intentionally trying to get people fed up with them so they can remove them without resistance.
