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Ok, guys I am a level 37 Undead Warlock, I dont see much sheep around, I am guessing this is in Alliance based area's.
Yes, I play on the alliance side. And don’t worry about sheep. They were a nice addition for low level players to get a bit of wool cloth early on, but sheep spawn sporadically and one at a time so they can’t really be used for skilling up tailoring.
As a level 37 character I’m very surprised you’re having trouble finding wool drops. Any humanoid around 20 to 30 should drop wool, or possibly even silk as they get closer to level 30. Of course, cloth drops in general are usually low unless your so much higher level than the mobs your killing that you can just plow through them. For example, I was farming silk for my priest alt, killing level 30 to 33 rogue mobs as a level 40 rogue myself. I was lucky if I got a stack of silk per hour. It’s been my personal experience that cloth drops are just slow. That’s what’s been holding up my priest’s tailoring. If you can farm money faster, you might be better off doing so and buying wool at the auction house.