I wish I knew the whole story, but from what i understand, Numbuh 5 refused to help Numbuh 1 when he was captured Von the Delightfulls and they used some sort of hair removal device, that would make it bald for good.
In the episode Operation F.O.U.N.T.A.I.N, The K.N.D go to save leeky Leona Number 4 asked why do they have to save her and Number 5 sagte that the last time that she did not save someone it was bad. So number 4 asked what was it and Number 1 sagte that the dcfdtl( Delightful children from down the lane) made him bald.