Yes, I had a Glitchdream last night in which there were flocks of wandering sheep. They were wry with their comments, also offered droppings and could be sheared for wool at will. Our clothing is, after all, kind of mysterious in-game. Plus the eventual additions of housewares and furniture would probably require fabric. (plus I really enjoy the Wallace & Gromit offshoot "Shaun the Sheep")
Plus, imagine the badges! Sheep Dipper, Sheep Shagger, Master Flocker, etc.