Failing a mission seems to drop fame in the area in which you failed the mission by 15 fame, and in others by 10 fame.
Fame naturally drops by a few points as time passes. I haven't nailed it down yet, but it seems to be 1-5 or so every three months. I've a theory that it drops by 1+x where x is the distance from the town you're in, but it's just a theory.
Also, when you fail, one completed mission "makes up for your failure," which seems to mean that the guild will offer B class missions. When you do one B class, they offer A class, etc.
Much of this is tentative, I'll firm this up as I continue testing.