Frederic Banting, with the help of Charles Best, and MacCleod, and a number of other people discovered insulin in the 1920's. When Banting received the Nobel prize back in 1923 for the discovery he made a speech that is a must read. In it he explains that the pancreas can regenerate. Frederick Banting's Nobel Prize Speech
Here is one of my favorite quotes from the speech. I hope this gives all of you some hope:
"Regardless of the severity of the disease, it has been found that by carefully adjusting the diet and the dose of insulin, all patients may be maintained sugar-free. Since this is possible, it is to be strongly advocated, because we have abundant evidence for the belief that there is regeneration of the islet cells of the pancreas when the strain thrown upon them by a high blood sugar is relieved. The increase in tolerance is evidenced by the decreasing-dosage of artificially administered insulin. In fact, in some moderately severe cases, the tolerance has increased sufficiently that they no longer require insulin"
-----when he says sugar-free- he means no sugar detected in the urine.