It's possible that they died, it's also possible that they may have become rouge-nin. Most of Kakashi's past is a big dark black inky spot that hasn't been covered, unfortunatly. :-/ I'd really like for the anime to cover more Kakashi stuff soon, but I don't see that happening until after Kimi and Gaara fight, and whatever Naruto and Sasuke do if/when he catches up.