What do you think I should do about losing my friend's favorite, limited edition T-shirt?
Are you going to tell him, apologize and try and get another?
I feel like I don't have to.
I'm sorry for your friend that you lost his favorite shirt. It was very precious to him and you have have taken better care of it and not lose it. I hope you can reconsider and buy him a new one to make him happy.
Why should I do it?
It's your responsibility to do something about it because you lost your friend's property. How would you feel if your friend borrowed something and then lost it? Wouldn't you expect him to replace it or compensate you in some manner?