Actually, the nanites would almost have to be self-reproducing for just that reason. Some may be lost, some could be damaged, and after a while they're just going to wear out regardless. If they're not capable of creating more, the morphing ability becomes a one-time only thing.
I think somebody mentioned a while back in this thread that a lot of the nanites would probably be specialized; some of them would store information, and some would provide the Z-space field for morphing. Specialization makes even more sense when you consider that some of them would have to be able to create more as well.
Apparently Andalite nanites are more well behaved than those in Prey, though